Nikkei edges up, Nippon Steel hits 16-year high

TOKYO, Dec 29 (Reuters) The Nikkei share average edged up 0.31 percent on Friday and was on track to end 2006 with a fourth straight year of growth, marking its longest bull run since 1989.

Nippon Steel Corp. continued its recent surge, hitting its highest level in 16 years on expectations of industry consolidation. Honda Motor Co. Ltd., Advantest Corp. and other exporters rose, helped by a weaker yen.

''Investors have expectations that there will be further consolidation in the steel industry,'' said Hideyuki Suzuki, investment information manager at SBI Securities.

''Investors believe that M&A (mergers and acquisitions) will be one of the key themes for the market next year.'' The Nikkei rose 53.04 points at 17,277.85 as of 0107 GMT. The broader TOPIX index was up 0.38 percent at 1,685.34.

Nippon Steel, Japan's largest steel maker, rose 1 percent to 684 yen after earlier hitting 691 yen, its highest since 1990.

Shares of the company have surged some 35 percent in the last month.

Steel makers are also seen as having attractive valuations and dividends.

Honda Motor gained 1.1 percent to 4,730 yen, helped as the yen remained near a two-month low against the dollar. A weaker yen is a boon to Japanese exporters as it boosts profits when earnings from abroad are brought home.

Chip-equipment maker Advantest gained 0.7 percent to 6,780 yen.

Reuters SBA VP0730