Nikkei up 1.3 pct as weak yen lifts tech stocks

TOKYO, Jan 12 (Reuters) The Nikkei share average rose 1.3 percent on Friday, snapping a two-day losing streak as technology firms such as Kyocera Corp. gained after the yen hit its lowest point against the dollar in more than a year.

Bank shares rose on expectations that the Bank of Japan may raise interest rates next week, benefiting banks' loan businesses. Strong lending data also helped these issues.

But Fast Retailing Co. Ltd. tumbled, becoming the biggest drag on the Nikkei 225 average after cutting its full-year profit forecast, which prompted a brokerage downgrade.

''The yen's level is quite low and investors are relieved for now that the SQ is over,'' said Masayoshi Okamoto, head of dealing at Jujiya Securities, referring to the special quotation for options contracts that are settled today.

The dollar hit a 13-month peak against the yen as a string of solid U.S. economic data over the past week has boosted expectations that the Fed will be in no hurry to lower interest rates.

Yoku Ihara, manager at the investment information department of Retela Crea Securities, said investors' global economic view had turned positive, supporting exporters.

''After the Bank of England raised interest rates on Thursday, the market view is that the global economy is not as weak as expected,'' he said. With overseas interest rates rising or staying at high levels, the yen will unlikely appreciate against other currencies, helping Japanese exporters, he added.

The Nikkei gained 218.84 points to 17,057.01, recouping some of about 400 points of falls in the past two days. For the week, the Nikkei was little changed, dropping 0.20 percent. The broader TOPIX index was up 1.72 percent at 1,685.27.

Trade was active, due in part to the settlement of Nikkei options contracts, with 2.08 billion shares changing hands on the Tokyo exchange's first section. Advancing shares beat decliners by a ratio of more than seven to one.

Yoshinori Nagano, chief strategist at Daiwa Asset Management, said falls in crude prices merited attention.

''Oil prices reflect the global economic expansion and Japanese stocks are said to be sensitive to the global economy,'' he said.

Nagano also said he is concerned about the petro-money which appears to have headed to Japan last year.

''When foreign investors stepped up purchases of Japanese stocks in the latter half of last year, the money mostly came from the UK which means some is petro-money. I wonder what would happen to the money flow if oil prices fall further,'' he said.

TECH, BANKS RING UP GAINS Electronics components maker Kyocera, which makes some 60 percent of its sales overseas, jumped 3 percent to 11,180 yen.

Game-related stocks rose after Nintendo Co. Ltd. this week raised its operating profit estimate to a record 185 billion yen for the year to March 31 thanks to brisk sales of its DS handheld game consoles.

Shares of Nissha Printing Co. Ltd., which provides touch screens for Nintendo DS, jumped 8.5 percent, while Mitsumi Electric Co.

Ltd., which supplies electronics parts to Nintendo, rose 4.1 percent.

In the technology sector, Canon Inc. and Sharp Corp. made separate announcements after the market closed.

Canon said it would buy out Toshiba Corp.'s stake in their flat-panel TV joint venture to speed up the commercial launch of a new type of television.

Meanwhile, Sharp said it would aim to boost group revenues by 10 percent in the next business year and added it expects mobile phone shipments to rise by about 8 percent to 14 million units in the next business year starting in April.

Ahead of the Bank of Japan's 17-18 policy setting meeting, investors betting on a credit tightening bought up bank shares such as Mizuho Financial Group Inc, which rose 3 percent.

Bank shares were also supported by central bank data on Friday which showed that average outstanding bank loans grew 1.2 percent to 384.9 trillion yen in 2006 from a year ago, the first annual increase in 10 years. The growth was also the biggest since the Bank of Japan started to compile data in 1993.

Meanwhile, Fast Retailing, which runs the Uniqlo chain of casual-wear stores, dropped 13.6 percent to 9,600 yen, the lowest close since August last year, as the company lowered its full-year profit forecast. Goldman Sachs downgraded the stock to ''sell'' from ''neutral''.

Fast Retailing Chief Executive Tadashi Yanai told Reuters in an interview on Friday that his firm aims to turn its loss-making U.S.

operations profitable in the business year starting in September.

REUTERS CS SSC1425