Japan's Nikkei rises as weak yen offsets China risks

* Softer yen boosts some exporters; Toyota, Canon up
* Fast Retailing suffers as Uniqlo closes more China stores
* Olympus rises on report of capital tie-up with Sony

By Dominic Lau
TOKYO, Sept 18 (Reuters) - Japan's Nikkei edged up on
Tuesday as support from a weaker yen offset concerns over
companies with large exposure to China, as anti-Japan protests
over a territorial dispute between the two countries disrupted
business and production.
By the midday break, the Nikkei share average was up
0.2 percent at 9,173.54 after rallying 1.8 percent on Friday in
the wake of the announcement of another round of stimulus by the
U.S. Federal Reserve. Monday was a public holiday in Japan.
"The Fed decision was the best scenario for the Japanese
market. Obviously, it will stimulate U.S. economic growth. The
impact on the yen will be limited," said Ryota Sakagami, chief
strategist at SMBC Nikko Securities.
"This uptrend will continue until the end of November before
the market starts to discount the impact of a fiscal cliff in
the U.S. I think in the one to two months, the Japanese market
will outperform the global market," Sakagami said.
He added that his year-end Nikkei target was 10,500 to
11,000, at least 14.5 percent upside from the current level.
The Nikkei is up 8.5 percent so far this year.
The softer yen gave support to some exporters, with Toyota
Motor Corp up 0.5 percent, Canon Inc adding
1.7 percent and industrial robot maker Fanuc Corp
gaining 1.4 percent.
The yen was quoted at 78.591 to the dollar on Tuesday
and had retreated as far as 78.93 on Monday, a one-week low,
pressured by speculation the Bank of Japan might ease policy
later in the week. It was well off a seven-month high of 77.13
hit last Thursday after the Fed announcement.
But Nissan Motor Co fell 2.3 percent after the car
maker said on Monday it had suspended production in China for
two days, while Honda Motor Co dropped 1.5 percent.
Construction machinery makers Komatsu Ltd and
Hitachi Construction Machinery Co Ltd, which have
considerable exposure to China, both lost 0.8 percent.
Fast Retailing sagged 5.4 percent yen after it said
it would close more of its Uniqlo clothing stores in China on
Tuesday, as it expects anti-Japan demonstrations there to
escalate.
Other retailers have also closed many of their stores in
China. Supermarket operator Aeon Co Ltd, which shed 2.6
percent, said it had closed 30 out of 35 stores in China as of
Tuesday.
"The concerns are what, if anything, these Chinese protests
turn into," a senior dealer at a foreign brokerage said.
The broader Topix index advanced 0.6 percent to
761.59 in brisk volume, with 58 p ercent of its full daily
average for the past 90 days.

"DIRT-CHEAP" JAPAN
CLSA said the Japanese market "offers dirt-cheap optionality
on an upturn in global markets."
"Japan is downside-protected, where Western markets have
factored in good things that haven't happened yet. Topix has a
strong track record as the geared play on global markets," said
Nicholas Smith, Japan strategist at CLSA in a report.
According to Thomson Reuters Datastream, the Topix carries a
12-month forward price-to-book ratio of 0.82, much cheaper than
the U.S. S&P 500's 19.3 and the pan-European STOXX Europe
600's 1.33.
Olympus Corp was up 2 percent and had reached an
11-month high after state broadcaster NHK reported on Friday
that Sony Corp was in the final stages of talks to
invest 50 billion yen ($634.4 million) in the cash-strapped
endoscope maker. Sony shares were up 3.9
percent.
Other gainers included Japan's largest security firm Secom
Co Ltd, which added 1.6 percent after the Nikkei
business daily said Tokyo Electric Power Co is in
late-stage talks to sell a majority stake in its data centre
business to Secom for around 50 billion yen.