Nikkei rises 2.5 pct, Softbank jumps on Yahoo bid

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By Taiga Uranaka

TOKYO, Feb 4 (Reuters) - Shares of two Yahoo Inc-related Japanese companies soared on Monday, helping push the Nikkei average up more than 2 percent by the midday break of trade.

The market was also buoyed by reports of potential rescue plans for large U.S. bond insurers that have been battered by the global credit crunch.

Softbank Corp (9984.T: Quote, Profile, Research, Stock Buzz) leapt 13.2 percent after Microsoft's (MSFT.O: Quote, Profile, Research, Stock Buzz) $44.6 billion bid for Yahoo, while Yahoo Japan Corp (4689.T: Quote, Profile, Research, Stock Buzz) shares were untraded due to a glut of buy orders.

"The No. 1 reason for today's gain is the monolines, and the second is Yahoo," said Tomokatsu Mori, chief fund manager at Fukoku Capital Management.

"The market has been moved by the monoline problem," he said, referring to bond insurers, which have been hit by downgrades by rating agencies amid a deteriorating subprime mortgage market.

A group of large banks has joined together to find ways to shore up Ambac Financial Group (ABK.N: Quote, Profile, Research, Stock Buzz), two people briefed on the talks said on Friday. [ID:nN01161241]

Downgrades of bond insurers are widely seen as hurting not only the financial industry but also the broader economy.