Japan Inc eyes foreign assets as yen stays strong

* Some Japan executives see yen weakening towards end of 2011

* Japanese executives still see risks in China, Europe, U.S.

* Toyota wants yen to weaken to 90 yen per dollar

TOKYO, Jan 5 (Reuters) - Japanese corporations including Mitsui & Co (8031.T) and Canon Inc (7751.T) plan to ratchet up investment overseas in 2011, executives say, as a still-strong yen gives them the financial clout to acquire foreign assets.

Japanese businesses will, say most executives, maintain their currency buying edge for at least six months.

"My company plans to invest aggressively, particularly overseas because of the strong yen," Shoei Utsuda, chairman of Japan's No. 2 trading firm Mitsui & Co, told Reuters at a New Year's gathering of executives hosted by the Nippon Keidanren, Japan's biggest business lobby.

Much of that investment will be in energy and other resources in countries such as Brazil, Australia and Russia, Utsuda said.

After hunkering down amid the 2008 financial crisis and the ensuing global recession, Japanese companies went back on the hunt for overseas assets last year. In the third quarter of 2010, the value of outbound mergers and acquisitions almost doubled to 2.8 trillion yen, according to Thomson Reuters data.

"Investment levels are recovering to pre-Lehman levels, not domestically, but overseas," Shoji Muneoka, president of Nippon Steel Corp (5401.T), Japan's biggest steelmaker, told Reuters at a separate gathering. "Driving that is demand abroad."

Following that demand are companies such as Seven & I Holdings (3382.T), Japan's biggest retailer. Its chairman, Toshifumi Suzuki, said at the Nippon Keidanren gathering that he wanted to "up the pace" of foreign spending, particularly in the United States.

With some executives expecting the yen's value to decline by the end of the year and with it the currency's buying power, companies may be eager to dip into their cash reserves sooner rather than later.

Corporate bosses predicting a softer yen by the year-end include Fujio Mitarai, chairman of Canon, the world's largest maker of digital cameras. He forecast the yen rate to remain stable for the next six months before weakening in the second half of 2011, although he declined to predict an end-of-year rate.

He told Reuters that Canon planned to raise investment this year, particularly overseas. Recent spending outside Japan by Canon includes plans to build a plant in Thailand for 14.6 billion yen ($178 million) that will begin making inkjet printers from October.

'MONOZUKURI'

Yorihiko Kojima, chairman of Mitsubishi Corp (8058.T), Japan's largest trading company, also foresees yen strength holding up at its current rate only until midyear.

"Because the yen is strong we are investing overseas," he said.

Mitsubishi in September invested 36.2 billion yen in a gas field being developed in Canada by Penn West Energy Trust. In November, Mitsubishi also announced plans to expand coal mines in Australia jointly with Xstrata Coal at a total cost of A$1.3 billion.

Rival Mitsui & Co is also spending to grow its overseas energy assets. In December it announced plans to spend A$1.25 billion to raise iron exports from Western Australia.

Mitsui chairman Utsuda also expects the yen to weaken. "The U.S. economy will probably recover slowly and that will lead to higher interest rates and strong-yen pressure will weaken," he predicted.

Former Sony Corp (6758.T) boss Nobuyuki Idei agreed, but noted that persistent risk in China and the United States would likely mean the yen will still stay a safe haven for investors and therefore remain relatively high.

The risks, explained Yasuchika Hasegawa, president of Japan's leading drugmaker, Takeda Pharmaceutical Co (4502.T), are the possibility of a fresh sovereign debt crisis, uncertainty over U.S. unemployment and quantitative easing, and worry that China's asset bubble will burst.

"I don't think the yen rate will change that much, basically the strong yen will continue," Hasegawa said.

Junichi Ujiie, chairman of Nomura Holdings (8604.T), and Taizo Nishimuro, adviser to the board at Toshiba Corp (6502.T), both predicted the yen would move between 80 yen and 90 yen against the dollar in 2011.

No one, however, predicted a return to the yen surge of 2010 that prompted the Japanese government to intervene in currency markets as the yen hit a 15-year high.

For Japan's carmakers, the faster the yen retreats from such levels the better.

"In order to protect Japanese 'monozukuri' (manufacturing) and jobs, I think 90 yen is the minimum line," Toyota Motor Corp (7203.T) President Akio Toyoda said at a separate New Year's gathering for auto executives.

"(The dollar) has been in the 80s for a very long time, and each company is doing their best. But if this keeps up, we can't fight to remain a manufacturing base in the world," Toyoda said. (Reporting by Junko Fujita, Tim Kelly, Yumiko Nishitani, Taiga Uranaka, Ritsuko Shimizu, Yuka Obayashi, Chang-Ran Kim; Editing by Chris Gallagher)