Nikkei up 1 pct, stop-loss trade boosts volume

* Nikkei up 1 pct, trading volume hits 4-week high
* Tepco jumps on electricity prices hike
* Electrical wire makers soars as investors bargain hunt
* Elpida Memory up on report it seeking Micron alliance

By Mari Saito
TOKYO, Jan 18 (Reuters) - Japan's Nikkei average rose
to its highest closing level in nearly two weeks on Wednesday
with traders citing a boost from large programme trade in the
afternoon, while electrical wire companies were the small-cap
favorite of the day.
Tokyo Electric Power Co jumped 7.8 percent and
topped Japan's bluechip list as the biggest percentage
gainer, after the utility said on Tuesday it will hike
electricity rates for businesses by an average 17 percent as it
struggles with massive costs in the aftermath of the Fukushima
nuclear crisis.
The Nikkei gained 1 percent to 8,550.58, soaring
past its 25-day moving average near 8,453 in a rise that traders
attributed to technical short-covering after stop losses on
Nikkei futures were triggered.
"There were stops triggered at around 8,510,
8,520, 8,530. We saw some buying in the Nikkei futures. You have
some stops triggered and that was the initial reason for the
spike. It is essentially followed by short-covering," said
Stefan Worrall, director of equity cash sales at Credit Suisse
in Tokyo.
The broader Topix climbed 0.5 percent to 734.98.
Electrical wire and cable makers outperformed the broader
market and won the biggest percentage gains on Wednesday.
Totoku Electric Co Ltd soared 21.4
percent, while rival SWCC Showa Holdings climbed
11 percent and Oki Electric Cable Co Ltd gained 4.4
percent.
"Investors continue to pick up smaller stocks and now we're
looking to see if the gains will extend over to the main names,
which have been losing for some time now," said Hiroyuki
Fukunaga, CEO of Investrust.
"Trading volume is steadily rising and it looks as though
these penny stocks have become a sort of pillar for this
market," he said.
Volume spiked on Wednesday, with 2.36 billion shares
changing hands on the main board, up from 1.76 billion shares on
Tuesday.

Lagging behind were construction companies, with
the sector index losing 0.7 after rallying 3.1 percent in the
previous session -- its biggest one-day percentage gain since
last March.
The sector gauge has risen more than 6 percent so far this
year compared with a flat Topix index, but it carries a
similar 12-month forward price-earnings ratio to the Topix at
11.6.
Japan Bridge Corp bucked the trend, extending its
recent rally and ending up by its daily limit, a rise of 20.6
percent. The stock has soared more than 268 percent this year.

U.S. EARNINGS
Market participants said Europe's problems, although far
from resolved, were pushed out of sight by a bullish outlook on
the U.S. economy and better-than-expected Chinese data this
week.
"There is a sense now that all the negative factors out of
Europe may have come out and U.S. economic data and markets
appear very bullish, tilting market sentiment towards a
'risk-on' mood, but it could very easily swing back as soon as
Greek talks hit a glitch," said Ryota Sakagami, chief strategist
of equity research at SMBC Nikko Securities.
Greece will resume negotiations with its creditors later in
the day to slash the country's debt and stave off default.
Yumi Nishimura, a senior technical analyst at Daiwa
Securities, said investors were also awaiting key earnings from
Goldman Sachs Group Inc as well as Bank of New York
Mellon Corp later in the day to get a better view of the
European impact on U.S. financial companies.
Japanese megabanks were steady, with Sumitomo Mitsui
Financial Group flat and Mitsubishi UFJ Financial
Group ending down 0.3 percent.
Struggling Elpida Memory Inc climbed 6.6 percent in
heavy trade after the Yomiuri newspaper said the chipmaker will
seek a capital tie-up with U.S. rival Micron Technology.
Elpida only reiterated that it is in talks with banks about
refinancing loans and discussing investments and prepayments
with clients but declined to comment on the Micron report.

Nintendo shed 3 percent to 10,100 yen to hit its
lowest closing level since early 2004 after Macquarie downgraded
the gaming company to "neutral" from "outperform" and cut its
target price to 10,000 yen from 14,200 yen.