Nikkei gains as shipping firms, exporters rise

TOKYO, Feb 9 (Reuters) The Nikkei rose 1.23 percent on Friday as shipping firms including Kawasaki Kisen Kaisha Ltd rebounded after UBS raised its target prices, and exporters such as Canon Inc advanced on a softer yen.

Mizuho Financial Group Inc. rang up hefty gains after Merrill Lynch raised its rating on the stock, but Mazda Motor Corp. fell after lowering its net profit forecast.

Masaru Hamasaki, senior strategist at Toyota Asset Management, said once the market starts to factor in corporate profit growth for next fiscal year, the Nikkei should rise significantly.

''Even if we are looking at profit growth of anywhere between 5 to 9 percent next (fiscal) year, the Nikkei could reach 19,000,'' he said.

''The U.S. economy appears to be holding firm, so Japan and the rest of Asia should do fine with no serious slowdown.'' The Nikkei rose 211.85 points to 17,504.33. On the week, the index dropped 0.8 percent, its first weekly decline since early January.

The broad TOPIX index added 1.45 percent to 1,745.09. Trade remained active, with 2.3 billion shares changing hands. Advancers outnumbered decliners by a ratio of nearly four to one.

Kawasaki Kisen, Japan's third-largest shipper, surged 10.7 percent to 1,156 yen, nearing its all-time high of 1,200 yen. The stock was helped by UBS's target upgrade to 1,300 yen from 950 yen.

UBS also upped its target price for Mitsui O.S.K. Lines Ltd.

to 1,500 from 1,200 yen.

Shares of shipping companies moved higher as investors looked for stocks yielding high dividends, largely for the right to receive the dividend payout this year.

Nippon Yusen KK., Japan's largest shipper, gained 3.2 percent and Mitsui O.S.K. Lines Ltd. jumped 9.4 percent.

''Shippers, steel firms and power companies -- I call them the dividend-yield three,'' said Soichiro Monji, chief strategist of equity management at Daiwa SB Investments.

''As we approach March, we see this kind of move towards stocks with high dividend yields every year,'' Monji said. ''A lot of stocks pay out dividends to those who are shareholders as of March ... In turn, many of these stocks then get sold in April.'' YEN HELPS The yen edged closer to a four-year low against the dollar and a record trough versus the euro on Friday before a Group of Seven finance ministers' meeting later in the day, which investors see as unlikely to seriously tackle the yen's weakness. Canon, which makes three quarters of its sales overseas, rose 3.6 percent to 6,390 yen. A weaker yen is a boon for companies that rely on overseas markets, as it boosts profits when earnings from abroad are brought home.

Canon Senior Managing Director Toshizo Tanaka told Reuters on Friday that conditions were now more conducive for share buy-backs after it conducted a share split last year.

Auto makers too benefited from the softer yen, with Toyota Motor Corp. up 1.1 percent and Honda Motor Co. Ltd. up 3.2 percent.

But Mazda Motor lost 5.6 percent to 740 yen after lowering its profit outlook.

REUTERS PV GC1416