Japan stocks led higher by Nikon, exporters strong

By Elaine Lies

TOKYO (Reuters) - Japan's Nikkei stock average climbed 1.6 percent on Tuesday for a second day of gains as investors sought out Nikon Corp and other shares with good results, while exporters gained as the dollar rose.

Nikon, the top contributor to the Nikkei's rise, soared 12.5 percent for its biggest one-day percentage gain in over five years after the precision equipment maker said annual profit rose 32.5 percent thanks to sales of advanced cameras and chip-making equipment. It also announced a share buyback plan. Another strong performer was Fujitsu Ltd, which surged 13.2 percent after a ratings upgrade and forecasting on Monday that its annual net profit would more than double this year.

"The market is now in a mood to buy, so investors are jumping on stocks that have had good earnings," said Noritsugu Hirakawa, a strategist at Okasan Securities. "Despite some lingering worries, there's a sense of growing confidence that the worst of the U.S. financial crisis is over, with the market also gaining confidence because the bulk of Tokyo earnings reports are now behind it."

The Nikkei rose more than 200 points to finish at 13,953.73, hovering not far from the four-month high of 14,208.67 hit last week.

Still, some other market players were wary, noting that the Nikkei has been unable to break above 14,000 so far this week despite the positive factors that have emerged. "There's growing reassurance that earnings don't seem to have become the bad factor that everyone was fearing, but whether this will translate into fresh buying remains to be seen," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

"What we're seeing today is mainly short-covering."

Other players said investors were moving to snap up shares that had been sold off sharply earlier this year, such as Nikon. The broader Topix was up 1.3 percent at 1,360.05.

After the market closed, Nissan Motor Co reported a 14 percent drop in fourth-quarter operating profit and forecast a sharp fall in annual profits this year due to a weaker dollar, rising commodity prices and sinking U.S. demand.