Nikkei rises 0.6 pct as Sony continues surge

Tokyo, May 21: The Nikkei average rose 0.56 per cent on Monday as shares of Sony Corp. kept gaining on its earnings outlook, helped by the yen's fall to a record low against the euro.

Broader gains were limited, however, as investors remained cautious following an early sell-off in Shanghai stocks.

Investors, particularly short-term traders, were concerned about the performance of Chinese stocks after the central bank raised interest rates on Friday, analysts said.

Sony continued its recent surge, rising 4.2 percent to 6,950 yen, its highest in five years. Last week it forecast a six-fold climb in group profit for this year.

''One question for the market right now is how far Sony will advance, I think we will see it go as far as 7,000 yen,'' said Hideyuki Suzuki, investment information manager at SBI Securities.

''There seems to be a revaluation of the stock at the moment.'' The Nikkei finished the morning up 97.58 points at 17,497.16.

The TOPIX index was up 0.43 percent at 1,702.92.

The yen hit a record low against the euro on Monday, falling as far as 163.91 against the single European currency.

A weak yen is a benefit for exporters such as Sony, as it boosts profits from sales abroad.

Eyes On China

Investors were also keeping a close watch on share prices in Shanghai.

''For day traders and other short-term investors, Shanghai stocks are a worry,'' said Masayoshi Okamoto, head of dealing at Jujiya Securities.

Chinese stocks rebounded on Monday after the central bank's monetary policy tightening triggered an early tumble.

Mitsui O.S.K. climbed 5.7 percent to 1,625 yen after Nomura Securities restarted coverage of the shipping sector and gave the company a ''1'' rating.

Rival Kawasaki Kisen Kaisha Ltd jumped 6.2 percent to 1,472 yen after receiving a ''3'' rating and Nippon Yusen KK gained 2.9 percent to 1,085 yen after receiving a ''2'' rating.

Trade was activity was moderate, with 919 million shares changing hands. Advancers beat decliners 841 to 721.

Reuters>