Nikkei up 2.4 pct as US rate worries ease, Hoya up

TOKYO, July 20 (Reuters) The Nikkei average rose 2.41 percent on Thursday as easing worries about U.S. interest rates encouraged investors to buy undervalued issues, including banks, while Hoya Corp. extended gains on strong earnings.

Kazuhiro Takahashi, general manager at Daiwa Securities SMBC's equity planning and administration department, said there were signs that lowered expectations for earnings were being corrected because of a raft of solid quarterly earnings.

''Hoya's earnings were good, and that is helping the market here. The same is true in the United States, where shares of Apple were bought on its earnings,'' he said, referring to Apple Computer Inc.'s quarterly results.

Apple said after the market closed on Wednesday its quarterly profits rose 48 percent, topping analysts' estimates.

The Nikkei was up 349.71 points at 14,849.97 as of 0102 GMT, adding to a 0.44 percent rise on Wednesday.

The TOPIX index jumped 2.8 percent to 1,516.75.

U.S. Federal Reserve Chairman Ben Bernanke told the U.S. Senate Banking Committee on Wednesday he saw core inflation moderating in coming quarters, which the market took as a sign the central bank may be close to ending two years of rate hikes.

The United States is a key market for Japanese products, and its monetary policy also broadly affects global investors' appetite for high-risk, high-return assets, including equities.

Bank shares such as Mizuho Financial Group Inc. were among stocks benefitting from restored confidence in equities following the Fed chairman's comments.

''Foreign investors' risk capacity seems to be improving as (Bernanke's comments) cleared some uncertainty away from the U.S. monetary policy,'' Daiwa Securities SMBC's Takahashi said.

High-tech glass maker Hoya climbed 5.4 percent to 3,910 yen, adding to a 4.5 percent gain the previous day as its first-quarter profit came in above market expectations.

Mizuho, Japan's second-biggest banking group, was up 2.4 percent at 950,000 yen and bigger rival Mitsubishi UFJ Financial Group Inc. rose 2 percent to 1.54 million yen.

Reuters YA GC0702