Nikkei up 1.7 pct as TDK, techs gain on US, yen

TOKYO, May 7 (Reuters) The Nikkei share average rose 1.7 percent on Monday with technology shares such as Canon Inc.

advancing following gains in the tech-heavy Nasdaq and helped by a softer yen.

TDK Corp. gained more than 2 percent after the company said on Sunday it plans to spend 50 billion yen to build a new ceramic capacitor plant.

''The market will keep an eye on U.S. stocks and the yen as they are likely to decide the direction of the market here for a while,'' said Yutaka Miura, deputy manager of the equity information department at Shinko Securities.

He also said another immediate focus will be the second-half peak of the Japanese corporate earnings season on Thursday and Friday.

The Nikkei was up 295.68 points at 17,690.60 as of 0047 GMT.

The broad TOPIX index rose 1.59 percent to 1,731.37.

The dollar slipped to 120.05 yen as of 2352 GMT, down from around 120.20 yen in late U.S. trading on Friday and off a two-month high near 120.50 yen reached last week.

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.

Miura said the market needs to carefully watch a series of U.S. economic indicators after the U.S. government said on Friday non-farm payrolls rose by 88,000 in April, short of economists' median forecast in a Reuters poll for a rise of 100,000.

''For now, investors are buying U.S. stocks on strong earnings and expectations of mergers and acquisitions,'' he said. ''But once those things calm down, the market is likely to start worrying about the U.S. economic outlook.'' TDK, which will become the latest company to boost output capacity of the tiny electronic component, climbed 2.4 percent to 10,290 yen.

Japan Airlines Corp. (JAL) advanced 3.1 percent to 235 yen after the Japan's largest airline said on Wednesday it now expects to have lost money for the second year in a row.

But JAL said its core operating performance was better than previously expected due to cost cuts and a recovery in demand for cargo and passenger flights, and it revised up its operating profit forecast for 2006/07.

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