Nikkei rebounds after 5-day slide, Softbank jumps

TOKYO, Mar 6 (Reuters) The Nikkei average rebounded from five days of heavy selling, rising 1.22 percent on Tuesday as exporters such as Toyota Motor Corp advanced with the yen's slide easing concern about their earnings prospects.

Softbank Corp. extended gains to end up 5.7 percent in the last trading hour as the company said it would seek damages from Calyon Capital Markets Asia over an analyst's report that said it found ''red flags'' in the Japanese company's accounting.

Shares of brokerage Nikko Cordial Corp. jumped 13.7 percent as Citigroup, the U.S. bank, is set to launch a tender offer for the scandal-hit Japanese brokerage, a Nikko spokesman said.

Many major Japanese companies have based their earnings forecast on an exchange rate of 115 yen to 118 yen to the dollar, and a rise in the dollar to 116 yen has provided relief, said Kenichi Azuma, equity strategist Cosmo Securities Co. Ltd.

''If the dollar/yen trades at this level, Japanese companies don't have to cut their earnings forecasts and that is a relief,'' he said.

The Nikkei rose 202.25 points to 16,844.50. The benchmark lost 8.6 percent in the previous five sessions. The broader TOPIX index gained 1.79 percent, or 29.83 points, to 1,692.54 -- its biggest one-day percentage gain since October.

Trade was active, with nearly 3 billion shares changing hands on the Tokyo stock exchange, remaining well above last year's daily average of 1.9 billion shares. Advancing shares beat decliners by a ratio of more than six to one.

The market took a breather from recent sharp sell-offs but analysts said investors remain wary.

''The market has gone through an extensive correction but for the market to return to where it was, we need to look at jobless data due on Friday'' and other numbers to see if the U.S. economy remains solid, said Tsuyoshi Nomaguchi, a strategist at the investment advisory department of Daiwa Securities Co. Ltd.

The Japanese stock market is likely to remain volatile ahead of Friday, when Nikkei option and futures contracts are due to be settled, he said. ''Investors are still tiptoeing.'' STEEL UP Nippon Steel Corp surged 8.3 percent to 862 yen and JFE Holdings Inc. jumped 6.4 percent to 7,300 yen.

''Auto and steel makers produce surprisingly conservative estimates but they always achieve their goals. So if asked which companies are reliable in terms of earnings prospects, raw materials like steel, nonferrous metals and also chemicals are the ones you would choose,'' said Akio Yoshino, general manager at Societe Generale Asset Management.

Aeon Co., Japan's second-biggest retail group, said after the market closed that its 2006/07 operating profit probably totalled about 190 billion yen, failing to meet market expectations and its own forecast after the mild winter hurt sales of seasonal products.

The dollar rebounded from a three-month low against the yen, helping Toyota and other exporters. A cheap yen helps boost earnings outside Japan when they are brought home.

Toyota advanced 3.5 percent to 7,720 yen and Nissan Motor Co.

Ltd. rose 1.8 percent to 1,311 yen.

Investors also looked for bargains. Sony Corp surged 4.1 percent to 5,890 yen, recouping some of its 13 percent loss in the last four sessions.

REUTERS CS PM1503