Nikkei up as weaker yen boosts exporters; JAL soars

* New TSE trading system launched with apparent smooth start

* Trading volume light, institutional investors wary-analyst

* JAL up 36 pct after reports credit line doubled

By Elaine Lies

TOKYO, Jan 4 (Reuters) - Japan's Nikkei stock average climbed 1.2 percent on Monday, bolstered by exporters such as Honda Motor Co (7267.T) on a weaker yen after U.S. jobless claims data strengthened hopes for a steady economic recovery.

The Tokyo Stock Exchange [TSE.UL] appeared to have a smooth launch for its $145 million "Arrowhead" trading system, as Asia's biggest bourse targets a dramatic increase in speed to revive its business and reputation. [ID:nTOE60000J]

Japan Airlines Corp 9205.T soared 36 percent after media reported that the state-owned Development Bank of Japan would double its credit line for the struggling airline to 200 billion yen ($2.2 billion).

Eyes are already turning to U.S. jobs data on Friday, especially after a Thursday report that Americans filed fewer jobless claims in the latest week than at any time in 17 months.

"There's talk that the figures could be quite strong after the surprisingly good payrolls data last month, with some people thinking that jobs figures may perhaps have gained instead of lost ground," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.

"I think that's premature. Jobs will still show losses, but not at the speed they were previously.

Non-farm payrolls figures for November showed a fall of 11,000, compared to the previous month's drop of 111,000. A Reuters poll of economists showed predictions for a drop of 20,000 for December.

In thin trade, the benchmark Nikkei .N225 rose 122.97 points to 10,669.41 after booking gains of 19 percent for 2009, compared to a 42 percent plunge in 2008.

The broader Topix .TOPX rose 1.1 percent to 917.63.

Volume was light, with some 667 million shares traded on the first section of the Tokyo Stock Exchange compared to last week's morning average of 731 million.

INVESTORS WARY?

Analysts were divided on the reason, with some saying it was due to investor wariness about the new trading system despite smooth sailing so far.

"There's no problems at this point, though the system will take a little getting used to. But for most investors, there won't be any change," said Masayoshi Okamoto, head of dealing at Jujiya Securities.

He said Japanese institutional investors were apparently waiting to see how the system performs, adding that if things continue to run smoothly they are likely to step in later in the day.

But others said the light volume was due to a slow start after the Christmas and New Year's holidays.

Honda gained 1.8 percent to 3,165 yen and Tokyo Electron (8035.T) rose 1.4 percent to 6,000 yen, while Sony Corp (6758.T) gained 2 percent to 2,723 yen.

Shares of JAL climbed to 91 yen. The stock lost a quarter of its value on Wednesday, the last trading day of 2009, on expectations it would face bankruptcy as part of a state restructuring plan. [ID:nTOE5BT00R]

The state-owned Development Bank of Japan said the government had asked it to double its credit line for JAL to 200 billion yen to provide it with funding while a state-backed turnaround fund decides whether to bail out the airline.

A spokesman for the DBJ said the bank was considering the government's request. [ID:nTOE60300R]

Shares of All Nippon Airways (9202.T) rose 4.4 percent to 263 yen after the Yomiuri newspaper said the airline was considering taking over the international routes of struggling rival Japan Airlines Corp 9205.T.

All Nippon is looking to increase its overseas flights by targeting profitable routes to Europe and the United States and has told Japan's government of its interest, the Yomiuri said, citing unidentified sources. [ID:nTOE600008] (Reporting by Elaine Lies; Editing by Edwina Gibbs)