Japan's Nikkei rises 0.7 percentt, exporters rebound

TOKYO (Reuters) - Japan's Nikkei stock average rose 0.7 percent on Wednesday, with exporters such as Honda Motor (7267.T) rebounding as the dollar steadied around 108 yen and investors picked up certain sectors such as car battery makers.

NEC Electronics surged 15.6 percent after Goldman Sachs raised its rating to "buy" from "neutral", citing the possibility of the firm's earnings beating market forecasts on growth of advanced microchips used in TV sets and mobile handsets.

The market's rise defied overnight losses on Wall Street, but market analysts said investors were buying Japanese stocks only because there were few other attractive assets.

Kenichi Hirano, operating officer at Tachibana Securities, said assets that had attracted global money such as U.S. bonds, gold and emerging market stocks were losing their appeal.

"They are choosing Japanese shares by way of elimination," he said.

"But the Nikkei average is not cheap any more, with the price-earnings-ratio at 17, so investors cannot aggressively buy Japanese shares either."

The benchmark Nikkei ended up 104.45 points at 14,452.82. The broader Topix gained 0.6 percent to 1,409.64.

U.S. stocks fell on Tuesday after a major brokerage warned that U.S. banks would have to raise as much as $65 billion in capital to shore up balance sheets weakened by the mortgage crisis. That had little impact on Japanese bank shares.

Honda rose 1.3 percent to 3,830 yen, and chip maker NEC Electronics (6723.T) rose to 2,970 yen.

The dollar steadied around 108 yen after retreating from a four-month high of 108.59 yen on Monday but still remaining above rates used by Japanese companies for their earnings projections for this business year.

BATTERY SHARES CHARGE

Amid a lack of market moving factors, investors' buying interest focused on specific sectors.

Battery makers rose sharply as investors see a promising future for next-generation car batteries along with an expected expansion of gasoline-electric hybrid and electric cars amid surging oil prices and worries about global warming.

Japan's largest auto battery maker, GS Yuasa Corp (6674.T), soared 12.5 percent to 595 yen, the biggest percentage gainer on the Nikkei. The firm has set up a joint venture with Mitsubishi Corp (8058.T) and Mitsubishi Motors Corp (7211.T) to produce lithium-ion batteries, a type of battery used in electric cars.

"Assuming that crude oil prices remain elevated, we forecast global sales of hybrid vehicles in 2010 at 1.3 million units based on the sales plans of individual automakers," Mizuho Securities analyst Satoshi Omori wrote in a research note.

"For 2015, we anticipate sales of 3.3 million hybrid vehicles, 100,000 plug-in hybrid vehicles, and 100,000 electric vehicles."

Furukawa Battery Co Ltd (6937.T) jumped 16.7 percent to 1,399 yen.

Shin Kobe Electric Machinery Co Ltd (6934.T) gained 10.6 percent to 1,045 yen. The company is a lithium-ion battery joint venture partner with Hitachi Ltd (6501.T) and Hitachi Maxell Ltd

(6810.T).

Shares of Skymark Airlines Inc (9204.T) rose 3.7 percent to 199 yen after the company's president told Reuters that its services would return to normal by late August.

A shortage of pilots forced Skymark to cancel hundreds of flights, leading the airline to cut its annual profit forecast last week.

Trade was thin, with 1.85 billion shares changing hands, compared with last week's daily average of 2.28 billion.

Advancing shares beat declining ones by 892 to 664.

(Editing by Sophie Hardach)