Nikkei tops 17,000 on futures rally, yen helps

TOKYO, Mar 8 (Reuters) The Nikkei average rose 1.52 percent to top 17,000 on Thursday, led by a rally in the futures market where investors bought back the March contract ahead of its Friday settlement, while a weaker yen lifted shares of exporters such as Kyocera Corp.

Nippon Oil Corp. and other oil shares advanced after crude oil prices surged nearly 2 percent on Wednesday on surprise declines in U.S. crude and gasoline inventories, making the oil and coal products sector IPETE.one of the best performers among the TOPIX's 33 industry sub-indexes Brokers such as Nomura Holdings Inc. climbed, helped by a rebound in the Nikkei beyond the psychologically important 17,000 line that it had breached on Monday amid a sell-off in global stocks.

Yasuo Yabe, director of sales at Meiwa Securities, said the Nikkei rebounded on arbitrage buying after large-lot buy orders boosted prices of the March futures contract ''Investors are buying back the futures contracts to close their positions ahead of Friday's settlement,'' he said.

Yabe said the dollar's rise by about one yen from Thursday morning's level also spurred buying of shares in exporters, whose earnings benefit from a weaker yen.

The dollar slipped to 115.55 yen in early trade before rising more than 1 yen to hit 116.59 yen The Nikkei was up 254.63 points at 17,019.25 at 0520 GMT. The broader TOPIX index rose 1.55 percent to 1,715.85.

Electronic components maker Kyocera Corp. rose 2.8 percent to 10,440 yen, while machinery maker Fanuc Ltd. gained 2.4 percent to 10,320 yen.

Chip-equipment maker Tokyo Electron Ltd. advanced 2.2 percent to 8,360 yen. The company said on Thursday it would spend 20-30 billion yen (2-258 million) to build a new plant in northern Japan.

Sony Corp. added 2.4 percent to 5,960 yen after Morgan Stanley raised its target price to 7,000 yen from 5,900 yen, saying a recovery at the electronics company is taking shape.

Shares of Daiei Inc. jumped 6.7 percent to 1,539 yen.

Retailer Aeon Co. is poised to finalise a deal to take a stake in the supermarket chain, a source familiar with the situation said on Thursday, in a move that will create Japan's biggest retail group.

Aeon shares fell 0.9 percent to 2,280 yen.

Investors were shifting funds into energy, commodity and steel stocks, betting that continuing demand from developing countries would help lift earnings, said Takahiko Murai, a general manager of equities at Nozomi Securities.

''The market is focused on resource and energy stocks at the moment. Starting with China (developing countries) will continue to invest in infrastructure,'' he said.

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