pTokyo, Jan 4: The Nikkei average started 2007 by hitting an eight-month closing high on Th

Tokyo, Jan 4: The Nikkei average started 2007 by hitting an eight-month closing high on Thursday, rising 0.74 percent, with Toyota Motor Corp. gaining on news that it became one of the Big Three automakers in 2006 and other exporters advancing on a softer yen.

Tokyo markets opened the year with a half-day of trading on Thursday. They were closed from Monday to Wednesday for New Year holidays.

''The Nikkei is up following solid growth in U.S. and European markets during our market holidays,'' said Tsuyoshi Segawa, an equity strategist at Shinko Securities.

The yen has been getting softer since the end of last year and market participants are tending to focus on promising stocks for the year such as Toyota, he added.

Toyota's shares hit a record high of 8,140 yen before closing at 8,090 yen, up 1.6 percent.

The Nikkei finished up 127.84 points at 17,353.67, the highest close since April 21. The broader TOPIX index rose 1.06 percent to 1,698.95, the highest finish since May 11.

Segawa said gains may be limited into next week, however, as investors are concerned that stocks may have risen too far.

Trade volume picked up with 1.06 billion shares changing hands on the first section, the highest morning total in two weeks. Advancing shares outnumbered declining ones by a ratio of more than four to one.

TOYOTA HIGHER, OIL STOCKS DOWN

Shares of Toyota gained after news that its sales rose more than 16 percent in the United States in December, ousting DaimlerChrysler to become one of the Big Three automakers in 2006.

Investors were also encouraged to buy Toyota and other automakers with the dollar trading near a 12-week high versus the yen. Honda Motor Co. Ltd. gained 0.9 percent to 4,740 yen and Nissan Motor Co.

Ltd. added 1.5 percent to 1,454 yen.

A weaker yen is a boon to Japanese exporters as it boosts profits when earnings from abroad are brought home.

The dollar was around 119.36 yen Shares of Idemitsu Kosan Co. Ltd., Japan's third-largest oil refiner, and other oil-related shares were down after U.S. crude oil prices tumbled on Wednesday due to mild weather in the U.S.

Northeast.

Idemitsu fell 3.1 percent to 11,610 yen, Japan Petroleum Exploration Co. Ltd. shed 1.8 percent to 6,950 yen, and Nippon Mining Holdings Inc. gave up 1.3 percent to 845 yen.

NTT DoCoMo Inc. was up 2.1 percent at 192,000 yen after the Nikkei business daily said Japan's largest mobile operator will keep initial investment on its so-called super 3G network down to 100-200 billion yen ($838 million-$1.68 billion), which could enable DoCoMo to cut fees and help it retain users.

Shares of Pigeon Corp., Japan's top baby care goods maker, rose 2.6 percent to 2,140 yen after government data on Monday showed Japan was expected to report about 1,086,000 babies born in 2006, the first year-on-year rise in six years.

Pigeon rival Combi Corp. added 0.7 percent to 732 yen.

REUTERS