Japan stocks extend gains, led by exporters on yen

(Adds comments and stocks)

By Aiko Hayashi

TOKYO, Dec 26 (Reuters) - Japanese stocks rose on Wednesday, led higher by technology shares and automakers such as Toyota Motor Corp (7203.T) following relatively solid U.S. holiday spending data and a fall in the yen.

The U.S. stock market rallied on Monday, led by financial companies. It was closed on Tuesday for Christmas.

One notable stock was Sanyo Electric Co Ltd (6764.T), which tumbled nearly 13 percent after the struggling electronics maker said it had made illegal dividend payments worth 28 billion yen ($245 million) between 2002 and 2004. [ID:nT198529]

"Solid American Christmas spending gave investors the impression that the U.S. economy hadn't eroded that much, helping high-tech exporters," said Hiroichi Nishi, general manager of equity marketing at Nikko Cordial Securities.

U.S. retailers' holiday shopping season sales up to Dec. 24 rose 3.6 percent from a year earlier, at the lower end of expectations, helped by a late-season spending surge on some items, according to data released on Tuesday by SpendingPulse. [ID:nN25273]

Nishi said while the weak yen boosts exporters, investors are also buying other stocks with solid earnings expectations and ones that had been oversold.

The benchmark Nikkei average .N225 ended the morning session up 0.2 percent or 31.08 points at 15,583.67. It finished Tuesday up 1.9 percent at 15,552.59, the highest close since Dec. 12.

The broader TOPIX index added 0.4 percent or 5.23 points to 1,501.26.

The dollar stood at 114.10 yen JPY= in Asian trade, staying near Monday's peak of 114.49 yen on electronic trading platform EBS, its highest since Nov. 7.

Trade was thin on the Tokyo exchange's first section, with 647 million shares changing hands, compared with last week's morning average of 834 million.

Advancing stocks outnumbered decliners by a ratio of nearly three to one.

SANYO SINKS

A softer yen benefits shares of exporters as it boosts profits when earnings from abroad are brought home.

Amona automakers, Toyota climbed 1.5 percent to 6,190 yen and Honda Motor Co Ltd (7267.T) added 0.8 percent to 3,850 yen.