Nikkei hits 7-mth high after tankan meets forecast

Tokyo, Dec 15: The Nikkei average rose to its highest level in seven months on Friday, gaining 0.7 percent as shares of Fanuc Ltd. and other manufacturers rose after the Bank of Japan's tankan survey showed a slight improvement in business sentiment.

Shares of Japan Tobacco Inc. gained 2.8 percent to 595,000 after the world's third-biggest tobacco maker said it is in talks to buy smaller rival Gallaher Group Plc The tankan's headline diffusion index for big manufacturers' sentiment was in line with forecasts, hitting a two-year high of plus 25.

That gave a boost to stocks as it eased concerns about the possibility of a central bank rate increase in the immediate future, said Toshihiko Matsuno, assistant general manager of investment research at SMBC Friend Securities.

''A result in line with forecasts is the best we could have had,'' Matsuno said.

''If the number had been too strong investors would worry about an interest rate increase, and a weak number would likely cause concern the economy was slowing down.'' The Nikkei was up 121.86 points at 16,951.06 as of 0006 GMT, its highest since May.

The broad TOPIX index was up 0.67 percent at 1,662.87.

Fanuc, a maker of industrial robots, rose 1.6 percent to 11,210 yen.

Chip equipment maker Advantest Corp. rose 1.6 percent to 6,480 yen.

Reuters