Nikkei up 1.2 pct, Sony jumps on strong outlook

(Updates to midmorning)

TOKYO, May 15 (Reuters) - Japan's Nikkei share average rose 1.2 percent on Thursday, extending its gains to a fourth day as Sony Corp (6758.T) jumped 9 percent on its bigger-than-expected outlook.

Exporters such as Honda Motor Co Ltd (7267.T) also climbed on a softer yen.

"With the dollar regaining the 105 yen level, there are expectations for earnings improvement as many companies assumed 100 yen in their outlook," said Norio Shimura, deputy head of equity department at Chuo Securities.

"Sony's outlook gave a sense of reassurance to the market," he added.

The market also got a boost from steel shares such as Nippon Steel Corp (5401.T) on a media report that they had reached a broad agreement with Toyota Motor Corp (7203.T) to raise steel prices by more than 30 percent. [ID:nT298869]

As of 0118 GMT, the benchmark Nikkei average .N225 was up 169.43 points to 14,287.98. The broader TOPIX index gained 1.7 percent to 1,396.63.

Sony rose 9.3 percent to 5,300 yen, the biggest contributor to the Nikkei.

Nomura Securities lifted its rating on Sony to "strong buy" from "buy" following the company's results and forecasts. [nTKF003152]

Nippon Steel rose 5 percent to 629 yen and JFE Holdings (5411.T) shot up 5.5 percent to 5,930 yen.

"The market reacted positively to the news that the steel makers are actually able to pass on cost rises to automakers," said Toshihiko Matsuno, assistant general manager of investment and research department at SMBC Friend Securities.

Honda rose 3.6 percent to 3,440 yen and Canon gained 2.2 percent to 5,650 yen.

Daikin Industries Ltd (6367.T) climbed 2.8 percent to 5,440 yen after the air conditioner maker said on Wednesday it expected its operating profit to rise 9 percent to 140 billion yen for the year ending in March 2009, with overseas sales likely to continue to lead growth, though the outlook was below a mean forecast of 145 billion yen in a poll of 11 analysts by Reuters Estimates. (Reporting by Taiga Uranaka; Editing by Hugh Lawson)