Nikkei hits 18-mth high; weaker yen helps

* Yen's recent dip to 2-mth low vs dollar buoys exporters

* Helped by buying by investors looking to secure dividends

* Short-covering in Nikkei futures adds fuel to rally -trader

* Selling pressure tied to Dai-Ichi Life's IPO seen ebbing

By Masayuki Kitano

TOKYO, March 26 (Reuters) - Japan's Nikkei average climbed 1.6 percent to its highest close in 18 months on Friday as recent weakness in yen buoyed exporters, and helped by investors looking to secure dividends before the financial year end.

Tokyo shares have gotten off to a solid start in the first quarter after lagging overseas indexes last year.

Expectations for improvements in corporate earnings and steady buying by overseas investors who were underweight last year have boosted the Nikkei 4.3 percent for the year to date, compared to a 1.9 percent gain in MSCI's index of global equities .MIWD00000PUS.

Shares in a broad swathe of sectors climbed on Friday, including chip-linked shares such as Advantest (6857.T) and Tokyo Electron (8035.T), which extended recent gains made on the hopes of strong earnings and improving demand.

The dollar's rise against the yen this week gave a boost to exporters, and a dearth of aggressive selling ahead of the financial-year end seems to be lending support to the broader market, said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.

"It's hard to tell what will happen once we are in April, but it seems like there are not many people in the market looking to sell before the end of the fiscal year," Ogawa said.

Selling pressure related to Dai-Ichi Mutual Life Insurance's $11 billion initial public offering seems to have peaked out, he said. "It seems that moves to secure funds to pay for Dai-Ichi Life's IPO were mostly completed as of yesterday," Ogawa said.

The Nikkei .N225 climbed 1.6 percent to 10,996.37. It also also hit an 18-month intraday high of 11,001.59.

The broader Topix index rose 1.5 percent to 966.72 .TOPX.

Stop-loss short-covering in Nikkei 225 futures JNIc1 added to the market's firm tone, as well as buying by investors looking to secure dividends, said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.

Friday is the last day for investors to buy many Japanese stocks and still get dividends on them for the year.

Technical charts show the Nikkei in a bullish trend, with the benchmark index having popped above the cloud on daily Ichimoku charts this month.

But there are some signs of overheating, with the Nikkei's relative strength index now around 76 and in over-bought territory. The Nikkei is also close to resistance near 11,310, which is a 38.2 percent retracement of the Nikkei's drop from its 2007 peak down to its 2008 trough.

Tokyo Electron, a manufacturer of semiconductor making equipment, climbed 2.7 percent to 6,200 yen after saying it expects to post smaller operating and net losses than it previously forecast.

Nissan Motor Co (7201.T) rose 1.2 percent to 777 yen, underperforming the broader market, after the Nikkei business daily reported that the carmaker and Daimler AG (DAIGn.DE) are in the final stages of talks to take stakes of under 5 percent in each other. [ID:nSGE62O0IQ]

Among other gainers, Canon (7751.T) rose 1.9 percent to 4,265 yen and Advantest gained 3.1 percent to 2,329 yen. (Additional reporting by Elaine Lies; Editing by Edwina Gibbs)