Nikkei up 0.77 pct as KDDI, exporters gain

TOKYO, Dec 12 (Reuters) The Nikkei average rose 0.77 percent on Tuesday as investors bought shares in exporters such as Toyota Motor Corp. after the yen gave up gains against the dollar, easing concern over exporters' earnings outlook.

KDDI Corp. advanced after Japan's No.2 telecoms carrier said on Tuesday it has agreed with a Russian firm to jointly lay undersea fibre-optic lines between the two countries.

''Investors have stayed away from exporters, but they are buying Toyota and other stocks on a recent softer yen, in addition to improving market sentiment,'' said Zenshiro Mizuno, senior managing director of Marusan Securities' equity trading division.

''News on the extension of securities tax breaks also swept away one of investors' concerns.'' Business daily Nihon Keizai reported that the government is poised to extend tax breaks on capital gains and dividends into the fiscal year starting in April 2008 after concluding that ending the measures could disrupt the stock market.

The Nikkei was up 127.04 points at 16,655.03 as of 0106 GMT, while the broader TOPIX index rose 0.66 percent to 1,638.77. The Nikkei ended the previous session at its highest close since Oct.

27 at 16,527.99.

KDDI rose 0.6 percent to 793,000 yen after saying it has agreed with Russian state-affiliated firm Rostelecom to jointly lay undersea fibre-optic lines between the two countries.

The two firms will split the investment of 5 billion yen ($42.83 million) and offer services to Japanese companies that are expanding their business in Russia.

Separately, electronics conglomerate NEC Corp. said it had won the contract for the project.

NEC was down 0.2 percent at 558 yen.

Seafood supplier Maruha Group Inc. jumped 9.6 percent to 274 yen after it announced on Monday a merger plan with smaller rival Nichiro Corp.

Shares of Nichiro also surged 14.6 percent to 243 yen.

The merger plan spurred speculation of a further shakeup, helping other seafood stocks extend gains.

Hohsui Corp., which engages in seafood trade, gained 9.6 percent to 218 yen, while Kyokuyo Co. Ltd. rose 1.2 percent to 265 yen.

Trading firm Marubeni Corp. added 1 percent to 607 yen after it and Tokyo Electric Power Co. Inc. said they would buy power assets in the Philippines for $3.4 billion from U.S. electricity producer Mirant Corp.

Shares of Tokyo Electric Power were up 1.1 percent.

Investors also bought stocks in exporters after the dollar hit a nearly three-week high around 117.26 yen in New York on Monday. A weaker yen benefits Japanese firms that make the bulk of their profits outside Japan, as it boosts profits when earnings are brought home.

Toyota rose 0.4 percent to 7,170 yen, while Canon Inc. added 0.5 percent to 6,470 yen.

Sony Corp. gained 2.6 percent to 4,810 yen after it said on Monday it had sold 58,750 shares in online brokerage Monex Beans Holdings Inc., or 2.5 percent of Monex's shares outstanding, for a 3.5 billion yen ($29.98 million) profit.

REUTERS DKS PM0739