Nikkei up 0.69 pc on way to close near 7yr high

Tokyo, Feb 14: The Nikkei average rose 0.69 percent on Wednesday on its way to close at a near 7-year high, with Sony Corp. rising after it said it will cut back on future chip spending and may outsource advanced ''cell'' microchips used in its PlayStation 3 (PS3) game gear.

Earnings results by Applied Materials Inc., the top supplier of equipment for making microchips, encouraged investors here to pick up chip shares such as Advantest Corp., said Norihiro Fujito, general manager of the investment research and information division at Mitsubishi UFJ Securities.

''Investors are buying high-tech stocks, which have been lagging behind, and shares of Sony as they expect outsourcing its 'cell' microchips would lead to efficiency,'' he said.

The Nikkei was up 122.04 points at 17,743.49 as of 0116 GMT.

The benchmark rose 0.67 percent to 17,621.45 on Tuesday, its highest close since May 2000.

The broader TOPIX index rose 0.66 percent to 1,767.55.

Sony rose 2.8 percent to 6,170 yen after the company said on Tuesday it would cut back on future chip spending and may not produce the advanced chips used in its PlayStation 3 (PS3) in-house in a move aimed at driving the semiconductor unit's nascent earnings recovery.

Nikko Citigroup said in a report on Wednesday the reduction in its capital spending burden could help Sony boost its margin target.

''We have the impression Sony is reviewing its business positioning from a long-term standpoint, and we anticipate some forward-looking streamlining and refocusing,'' it said.

Chip-equipment firm Advantest was up 2.7 percent at 5,670 yen, and Tokyo Electron Ltd. added 2 percent to 8,640 yen.

In the United States, Applied Materials on Tuesday posted a quarterly profit that nearly tripled and said revenue could rise as much as 5 percent in its current quarter.

Bridgestone Corp. gained 4.7 percent to 2,590 yen after Japan's top tyre maker said on Tuesday it would likely beat its operating profit forecast for 2006 by 15 percent, citing higher sales volumes, a more profitable product line-up and a weaker yen.

Reuters