Nikkei up as Softbank, Mizuho gain, Sanyo surges

TOKYO, May 29 (Reuters) The Nikkei average rose 0.53 percent on Tuesday morning as shares of Internet firm Softbank Corp., Mizuho Financial Group Inc. and other stocks popular with retail investors were helped by a rebound in Japan's long-suffering start-up markets.

Sanyo Electric Co. Ltd. surged 10.4 percent to 213 yen. The struggling electronics maker posted an annual operating profit for the year just ended, helped by aggressive cost cuts.

But gains were likely to be limited, market participants said, due to concern about the outlook for Prime Minister Shinzo Abe's pro-market coalition.

''We're seeing the influence of the small-cap markets, which at long last are starting to rebound,'' said Shigemi Nonaka, special adviser at Polestar Investment Management.

''Individual investors become a little bit more lively when the start-up markets improve ... Start-ups had fallen too far.'' The Nikkei finished the morning up 92.38 points at 17,679.97. The broad TOPIX index was up 0.69 percent at 1,736.36.

The Mothers index of start-ups rose 1.34 percent to 869.76 after hitting a record low earlier this month. The index has lost some 65 percent since the end of 2005.

Shares of Internet and telecom firm Softbank, a favourite of Japanese retail investors, added 1.7 percent to 2,680 yen.

Mizuho Financial, Japan's second-largest bank and another stock popular with individual investors, gained 1.8 percent to 860,000 yen.

On the Mothers market, designer handbag maker Samantha Thavasa Japan Ltd. jumped 14.2 percent to 242,000 yen after the company said it would pay a dividend of 1,600 yen for the year to February 2008.

That would mark its first dividend since listing in 2005.

POLITICAL CONCERNS Political concerns were likely to keep investors on the cautious side, participants said.

A member of Abe's cabinet committed suicide on Monday, compounding problems for the ruling Liberal Democratic Party ahead of a July election for parliament's upper house.

''If you look at recent surveys, popular support for the government continues to fall. The consensus had been that the LDP wouldn't lose (July's) Upper House election,'' said Takahiko Murai, general manager of equities at Nozomi Securities.

''Now, people want to wait and see.'' In particular, domestic participants have been worried political change could turn foreign investors away from Japanese equities.

Overseas investors are the main driver of the world's second-largest stock market.

Shares of Japan's three largest shipping firms gained after brokerage UBS lifted its price targets on the stocks, citing attractive valuations.

Nippon Yusen KK, Japan's largest shipper, advanced 1.8 percent to 1,097 yen. The brokerage lifted its target to 1,300 yen from 1,100 yen.

Mitsui O.S.K. Lines Ltd. rose 2.3 percent to 1,617 yen, after UBS raised the target for Japan's second-largest shipper to 1,900 yen from 1,500 yen.

Kawasaki Kisen Kaisha Ltd. jumped 3.4 percent to 1,447 yen.

Its target was raised by 400 yen, to 1,700 yen.

Trade was relatively active, with 945 million shares changing hands on the Tokyo exchange's first section.

Advancers beat decliners by a ratio of two to one.

REUTERS AGL VC0930