Nikkei hits 2-month closing high, some results beat expectations

TOKYO (Reuters) - The Nikkei stock average rose more than 1 percent to mark a two-month closing high above 9,000, extending gains scored the previous day on the European debt deal with some stocks rising after revisions to profit outlooks were not as bad as feared.

Softbank (9984.T), a domestic telecommunications firm insulated from the impact of the yen, shot higher on record half-year results, while consumer electronics firm Sharp (6753.T) and construction machinery maker Komatsu Ltd (6301.T) jumped despite cutting their outlooks.

"There was buying today on the perception that the worst of the bad news is out of the way for some companies," said Fumiyuki Nakanishi, strategist at SMBC Friend Securities.

"The strong yen has a clearly negative impact on profits, but it's been strong for so long that it's factored into most investors' expectations by now," he said.

Still, with the yen hitting a new record high against the dollar overnight, gains for the broader market were more tempered.

The Nikkei .N225 climbed 1.4 percent to 9,050.47, gaining 4.2 percent for the week. The broader Topix index .TOPX added 1.1 percent to 771.43, rising 3.7 percent over the week.

Volume was robust compared to recent averages, with 2.16 billion shares changing hands on the main board, up from Thursday's full-day volume of 1.81 billion shares and the highest since Sept 9. Decliners trailed advancing issues 602 to 933.

With many investors sitting on relatively high cash positions, analysts at Goldman Sachs led by Kathy Matsui on Friday raised their three-month Topix target to 800 from 760, saying the scope for the current "relief rally" to last at least through the end of this year is quite high.

The Nikkei has gained about 4 percent this month, compared to a more than 13 percent climb for the U.S. Standard and Poor's index .SPX, which is on pace for its biggest monthly gain since October 1974.

The S&P 500 rose above its 200-day moving average for the first time since the beginning of August, a signal which U.S. strategists said could attract long-term buyers into the market in coming days.

The Nikkei, by contrast, is still trading well below its 200-day moving average of 9,600.

The Nikkei is also lagging a rise of more than 14 percent in ex-Japan Asian shares shares.

Global equities markets rallied after European leaders, the International Monetary Fund and bankers agreed on Thursday to a plan that includes steps to recapitalize European lenders and leverage the region's rescue fund to give it firepower of $1.4 trillion.

SINKING DOLLAR

But the dollar sunk to a fresh all-time low around 75.64 yen on Thursday, even after further monetary policy easing by the Bank of Japan.

Komatsu added 5.6 percent to 2,023 yen after cutting its full-year profit forecast to 186 billion yen from its previous estimate of 200 billion.

Komatsu also said it would buy back and retire up to 1.65 percent of its outstanding shares up to 30 billion yen, from Nov 7 through Dec 28.

Sharp rose 6.2 percent to 737 yen after the electronics maker cut its full-year operating profit forecast on Thursday by 12 percent.

Softbank jumped 8.4 percent to 2,655 yen after its half-year net profit nearly tripled from a year earlier to 217.3 billion yen on higher sales due to Apple's iPhone, and sales of securities holdings.

Olympus Corp (7733.T) fell 10.2 percent to 1,217 yen and was the heaviest-traded shares by turnover. The head of the Tokyo Stock Exchange said on Friday that the scandal-hit manufacturer risks possible lawsuits if an independent probe of the company's contentious acquisitions leans toward the current management's view.

(Reporting by Lisa Twaronite; Editing by Joseph Radford)