Nikkei up 1.2 pct as soft yen buoys exporters

TOKYO (Reuters) - Japan's Nikkei stock average rose 1.2 percent on Monday, as exporters such as Kyocera Corp (6971.T) rose on a weaker yen and after U.S. data eased concerns on Wall Street about inflation and a near-term rise in interest rates.

Mitsubishi Motors Corp (7211.T) climbed 2.5 percent to 206 yen after the Nikkei business daily reported the Japanese automaker will tie up with France's PSA Peugeot Citroen (PEUP.PA) in electric vehicles, to supply technology and next-generation batteries.

"A softer yen sparked hopes for upward earnings revisions for some exporters," said Takahiko Murai, general manager of equities at Nozomi Securities.

"But we have to brace for an eventual dramatic slowdown in Japan, where the stock market and the economy depend on overseas demand, considering recent declines in Asian shares and rising inflation worries in emerging countries."

As of 0043 GMT, the benchmark Nikkei .N225 gained 168.76 points to 14,142.49, after having lost 3.6 percent last week.

The broader Topix climbed 1 percent to 1,385.05.

Murai said that as long as the dollar stays strong, a sudden and large drop in the market is unlikely, but the Nikkei average will likely have a hard time holding above 14,000.

U.S. stocks closed higher on Friday, helped by a government report that showed underlying price pressures rose only moderately in May, benefiting technology shares that had been beaten down in recent days on worries about rate increases and weaker overseas sales. .N

Japan's exporters also gained as the dollar fetched around 108.27 yen, holding near a four-month high. A softer yen boosts exporters' overseas profits when they are brought back home.

Electronic parts maker Kyocera climbed 2 percent to 10,350 yen and Canon Inc (7751.T) added 2 percent to 5,550 yen.

Toyota Motor Corp (7203.T) rose 2 percent to 5,600 yen.

(Reporting by Aiko Hayashi; Editing by Brent Kininmont)