Nikkei up 1.8 pct as Sony, exporters gain

(Updates to midmorning)

TOKYO, May 29 (Reuters) - Japan's Nikkei average rose 1.8 percent on Thursday, led by high-tech exporters such as Sony Corp (6758.T) on a softer yen and after Wall Street was buoyed by signs of stronger business spending.

Japan Steel Works Ltd (5631.T) gained 3.7 percent to 2,130 yen after Mitsubishi UFJ Securities lifted its target price to 3,250 yen from 2,300 yen, citing potential global demand growth for nuclear reactors.

Takahiko Murai, general manager of equities at Nozomi Securities, said the market largely rebounded after the previous day's sell-off, but the benchmark Nikkei is unlikely to be able to stay above the 25-day moving average of around 14,000.

"Durable goods data is a very volatile indicator and I doubt the situation will improve just because they reported a big jump this time," he said.

U.S. stocks rose on Wednesday after a government report on orders for durable goods -- long-lasting manufactured items -- showed a surprising jump in business investment last month.

"If poor economic data were to come out, stocks would be sold again. The overly optimistic views that the U.S. economy will recover later this year may have to be corrected as further losses at financial institutions are still looming," Murai said.

As of 0042 GMT, the Nikkei .N225 added 244.84 points to 13,954.28 after falling 1.3 percent the previous day.

The broader Topix index advanced 1.3 percent or 17.94 points to 1,366.63.

In New York on Wednesday the dollar traded at a two-week high against the yen at 105.32 before paring some of its gains. It was trading at 104.73 JPY= in early Asian trade.

Investors had fretted over a stronger yen as it dents exporters' overseas profits when they are brought back home.

Sony shot up 3.3 percent to 5,060 yen, industrial robot maker Fanuc Ltd (6954.T) advanced 3.6 percent to 10,920 yen and Toyota Motor Corp (7203.T) added 1.8 percent to 5,110 yen.

In contrast, Oki Electric Industry Co (6703.T) plunged 10.1 percent to 196 yen after Goldman Sachs cut its rating to "sell" from "neutral", saying the sale of its chip business was not likely to improve the firm's earnings and financial condition.

Oki said on Wednesday it would sell its microchip operation to Rohm Co (6963.OS) for about 95 billion yen ($908 million). [ID:nT154155] (Reporting by Aiko Hayashi, Editing by Michael Watson)