Japan stocks rise on U.S. bond insurer rescue talk

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By Elaine Lies

TOKYO, Feb 25 (Reuters) - Japanese stocks climbed more than 2 percent on Monday, with Millea Holdings (8766.T: Quote, Profile, Research, Stock Buzz) and other insurers powering higher after talk of a U.S. bond insurer rescue plan eased concerns about the subprime loan crisis.

Another boost came from a report in Britain's Times newspaper that China's sovereign wealth fund planned to buy as much as $10 billion in Japanese stocks and could consider purchasing a large stake in oil and gas developer Inpex Holdings Inc (1605.T: Quote, Profile, Research, Stock Buzz), which also climbed. [ID:nT2430]

U.S. stocks staged a late rally on Friday on news that banks were near a deal to bail out bond insurer Ambac Financial, and that a rescue could come this week, though a source told Reuters that while progress has been made the deal might still fall through.

Still, investors seized on the news in Tokyo.

"One, it's the bond insurer rescue. Two, it's the bond insurer rescue," said Katsuhiko Kodama, a senior strategist at Toyo Securities Co Ltd.

"The China sovereign fund news is interesting but this is mainly a buying factor for specific stocks, not something that will necessarily lift the whole market."

But he and others remained wary even while cheering the rise.