Nikkei hits 2-mth high, banks surge on reassurance

(Updates to midsession)

TOKYO, April 28 (Reuters) - Japan's Nikkei stock average rose 0.75 percent to a two-month high on Monday, with Mitsubishi UFJ Financial Group (8306.T: Quote, Profile, Research, Stock Buzz) and other banks surging on growing confidence that the worst of the credit crunch may be over. Japanese government bond futures extended losses and investors began to shift those funds back into stocks, market players said, while exporters such as Honda Motor Co Ltd (7267.T: Quote, Profile, Research, Stock Buzz) rose as the dollar advanced against the yen.

The Nikkei .N225 gained 104.63 points to 13,968.10 after earlier rising above 14,000 for the first time since Feb. 27. The broader TOPIX was up 1.9 percent at 1,365.43. (Reporting by Elaine Lies;)