Japan stocks up as U.S. fears ease, yen stabilises

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By Aiko Hayashi

TOKYO, March 6 (Reuters) - Japan's Nikkei average rose 1.4 percent on Thursday after hitting a six-week closing low the previous day, with exporters such as Honda Motor Co Ltd (7267.T) rising on a stabilising yen and easing concerns about a U.S. recession.

Resource-related shares such as Sumitomo Metal Mining Co Ltd (5713.T) gained on a jump in metal prices, while record oil prices lifted trading houses and Japan's top oil and gas developer, Inpex Holdings Inc (1605.T).

U.S. stocks rose on Wednesday as data suggesting the services sector may not be as weak as feared allayed investors' concerns about a recession. [.N]

"Investors are encouraged by the better-than-expected U.S. economic data and calmer currency moves, with the yen trading around 104 yen to the dollar," said Zenshiro Mizuno, senior managing director in equity trading at Marusan Securities.

"But gains are limited as investors are trying to decide if now is the time to buy or if they should wait for another possible downward spike, though the market is generally moving on expectations that the global economy, including the United States, is likely to recover later this year."

The benchmark Nikkei average .N225 was up 186.26 points at 13,158.32 after logging its lowest close since Jan. 23 on Wednesday.

The broader TOPIX index added 1.5 percent or 19.06 points to 1,282.97.

Mizuno said that concerns about the earnings outlook for Japanese companies were putting a lid on market gains and that currency levels would determine their direction.

Most Japanese firms have set their assumed currency level around 105 yen to the dollar for the year, so a stronger yen sparks concerns about their earnings outlooks.

EXPORTERS IN FAVOUR

The dollar was trading around 103.77 yen JPY= after climbing to around 104.18 in New York. The dollar logged a three-year low of 102.6 yen on Monday.

Shares of Honda rose 1.6 percent to 3,120 yen, Canon Inc (7751.T) advanced 2 percent to 4,630 yen, and industrial robot maker Fanuc Ltd (6954.T) climbed 2.9 percent to 9,580 yen.

Inpex jumped 6 percent to 1.24 million yen after oil rallied $5 to a record near $105 a barrel on Wednesday.

Gold and copper producer Sumitomo Metal Mining climbed 3.7 percent to 2,230 yen after gold set a record high near $1,000 an ounce on Wednesday as rising energy prices increased gold's appeal as a hedge against inflation.