Nikkei up as exporters rise on yen, gains limited

TOKYO, Dec 18 (Reuters) Tokyo stocks rose on Monday with investors buying exporters such as Sony Corp. on a softer yen, but gains were limited as investors became cautious as the Nikkei average neared the 17,000 level, which would mark its highest in seven months.

Japan Tobacco Inc. fell 2.5 percent at the start of trade after it said it is buying British cigarette maker Gallaher Group Plc in a 7.5 billion pound (.7 billion) cash deal.

The agreement, announced after the close of trade on Friday, marks the biggest ever foreign acquisition by a Japanese company.

''There seems to be pressure toward selling in the market,'' said Katsuhiko Kodama, a senior strategist at Toyo Securities.

Investors were being cautious about the Nikkei hitting the 17,000 level, at they might sell to take profits, he said.

The Nikkei edged up 0.15 percent or 25.86 points to 16,940.17 as of 0105 GMT. The broader TOPIX index rose 0.19 percent to 1,660.53.

Investors await the outcome of the Bank of Japan's final policy meeting of the year, being held on Monday and Tuesday.

Sony gained 1.8 percent to 5,140 yen, while electronics components maker Kyocera Corp. added 0.8 percent to 10,960 yen.

The yen was trading at 117.98 yen to the dollar.

Toshiba Corp. rose 2.5 per cent to 789 yen after its subsidiary Westinghouse Electric won a nuclear power deal with China estimated to be worth some billion.

Japan Tobacco was down 4 percent at 573,000 yen.

Misawa Homes Holdings Inc. was untraded with sell orders at 2,780 yen, down 15.2 per cent from Friday's close after the Japanese home builder said on Sunday it plans to restate past earnings as one of its subsidiaries padded its sales over the last few years.

REUTERS PDS BST0736