Nikkei up 1.1 pct, exporters rebound on weaker yen

TOKYO, Mar 15 (Reuters) The Nikkei average rose 1.10 percent on Thursday, led by exporters such as Canon Inc., as concerns about their earnings receded following a recovery in U.S. stocks and the yen's retreat against the dollar.

Relieved by a halting of a slide in global share prices, investors resumed buying shares of companies with good earnings prospects such as property and steel firms including Nippon Steel Corp.

Softbank Corp. was the largest contributor to the Nikkei's rise, climbing 4.5 percent to 2,890 yen after Daiwa Institute of Research started covering it with a ''1'' rating and set a one-year target price of 4,000 yen.

Chubu Electric Power Co. gained 3.8 percent to 4,150 yen after the Nikkei business daily reported that British hedge fund TCI has acquired at least a 1 percent stake in Chubu and asked it for higher dividends and share buybacks.

Yasuo Yabe, director of sales at Meiwa Securities, said investors were still cautious about the U.S. economic outlook after the Tokyo market booked its second-biggest daily percentage fall this year on Wednesday on concerns about mounting problems in the U.S. subprime mortgage sector. The sector serves borrowers with poor credit histories and charges higher interest rates.

''Investors are pondering whether subprime mortgage problems will have a broader economic impact or not,'' he said.

The Nikkei closed up 183.50 points at 16,860.39. The broad TOPIX index rose 1.15 percent to 1,694.18.

Masaki Iso, chief investment officer at Yasuda Asset Management, said investors feel relieved as the yen's rebound against the dollar was short-lived.

''Everybody had been worried how far the yen would rise against the dollar if unwinding of yen carry trades accelerates,'' he said. The carry trade is a strategy where investors borrow a low-yielding currency such as the yen to finance purchases of higher-yielding assets.

''But the yen soon slipped back to the level of 117 to the dollar, which was a minor movement compared with its wild swing last month in the wake of a sell-off in global stocks,'' he added.

The dollar inched up to 117.20 up slightly on the day from near 117.05 in late New York trade, recovering more than 1 percent from the overnight low of 115.76 yen.

EXPORTERS, MACHINERY SHARES UP Shares in exporters benefited from a weaker yen, with Canon up 1.1 percent at 6,210 yen and Honda Motor Co. Ltd. adding 1.0 percent to 4,150 yen.

A weaker yen is a boon to companies that make the bulk of their sales abroad because it boosts profits when earnings from abroad are brought home.

Mitsubishi Heavy Industries Ltd. jumped 9.2 percent to 716 yen after it won an order to build two nuclear reactors for U.S.

power plant operator TXU Corp. in its first overseas reactor deal, estimated to be worth as much as .2 billion.

Other nuclear reactor-related shares also rose. Hitachi Ltd., which has teamed up with General Electric Co. in the nuclear reactor business, jumped 5.3 percent to 856 yen.

Toshiba Corp., which bought Westinghouse last year, climbed 3.6 percent to 758 yen while Japan Steel Works Ltd., a maker of cast and forged steel products, surged 9.8 percent to 1,206 yen.

Shares in Nikko Cordial Corp. shed 0.3 percent to 1,685 yen, compared with the 1,700 yen per share being offered by Citigroup in its .6 billion buyout offer for Japan's third-biggest brokerage.

Citigroup began accepting tenders on Thursday. It had raised its offer price earlier in the week from 1,350 yen, but Japan Chief Executive Douglas Peterson said on Wednesday the new offer was final.

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