Nikkei up 1.5 pct, high-tech shares lifted by yen

Tokyo, Apr 16: The Nikkei average rose 1.52 percent on Monday, led by gains in high-tech shares such as Canon Inc. and other exporters as the yen slipped after a weekend Group of Seven meeting.

Shares of semiconductor wafer makers such as Shin-Etsu Chemical Co. advanced after brokerage Merrill Lynch raised its price targets for these issues citing larger-than-expected increases in volumes and prices of 300-millimetre wafers.

But trade volume fell as investors await a string of corporate earnings results and economic indicators due this week in the United States, including CPI and housing starts.

''Investors bought shares of electric and precision machinery makers as the G7 meeting result made them feel confident that the yen is unlikely to correct higher,'' said Hiroyuki Fukunaga, chief strategist at Rakuten Securities.

The yen hit a record low against the euro on Monday as Group of Seven finance officials did not single out the Japanese currency's weakness at a weekend meeting. Against the dollar, the Japanese currency fell to its lowest since late February.

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.

The Nikkei closed up 264.35 points at 17,628.30. The broad TOPIX index gained 1.18 percent to 1,725.60.

Yoshihisa Okamoto, senior vice president at Fuji Investment Management, said the recovery in the Nikkei on Monday was due largely to arbitrage buying as the futures market staged a short-covering rally following the G7 meeting.

''The Nikkei has just recouped the losses it sustained in the previous two sessions. It is unlikely to break out of range unless it gains a fresh directional clue, such as positive economic data from the United States,'' he said.

TECHNOLOGY SHARES RISE

Shares of exporters rose, with camera maker Canon up 2.6 percent at 6,620 yen and chip tester maker Advantest Corp. climbing 2.4 percent to 5,540 yen.

Toshiba Corp. rose 1.6 percent to 895 yen after the electronics conglomerate said on Monday it would sell its movie and DVD unit to advertising agency Hakuhodo DY Holdings Inc. and pull out of the entertainment content business.

The sale of the unit, Toshiba Entertainment Inc., would follow an agreement last year with EMI Group Plc for the British music company to buy out shares in their joint music venture, as Toshiba shifts its focus to chips, nuclear energy and consumer electronics and pulls out of less profitable businesses.

Among other gainers, Impact 21 Co. surged 17.7 percent to 2,590 yen, nearing the offer price of 2,600 yen per share put by Polo Ralph Lauren Corp., which said on Friday it would buy the firm, its Japanese licensee.

The non-bank financial sector IFINS.was the only faller among the TOPIX's 33 industry subindexes Mitsubishi UFJ Nicos dropped 3.4 percent to 373 yen after the consumer lender estimated a bigger-than-expected 8 million annual net loss as it hiked reserves against legal claims by borrowers.

In an interview on Monday, Yoshimi Inaba, executive vice president in charge of Toyota Motor Corp.'s Chinese operations, said the company expects its sales in China to easily top 500,000 vehicles in 2008 with the launch of at least two new cars.

After the close of trading, Sumitomo Trust&Banking Co. said it had agreed to buy a trust banking unit of Barclays Global Investors UK.

Trade volume declined, with fewer than 2 billion shares changing hands on the Tokyo exchange's first section. Advancing shares beat decliners by a ratio of nearly three to one.

REUTERS