Nikkei up 1 pct at 8-week high, Canon gains
(Updates to midsession)
TOKYO, Oct 2 (Reuters) - Japan's Nikkei stock average rose 1 percent on Tuesday, clearing the 17,000 level for the first time in nearly eight weeks as a rally on Wall Street and a softer yen pushed up exporters such as Canon Inc (7751.T).
Financial shares such as Mitsubishi UFJ Financial Group (8306.T) advanced, tracking gains in U.S. banks as investors bet the sector may have seen the worst of the credit squeeze after three global banks detailed expected losses from the crisis.
"Since last week, global markets have entered an uptrend and stocks rise even while digesting seemingly bad news," said Hitoshi Yamamoto, president of Commerz International Capital Management (Japan).
But Yamamoto said the Nikkei would likely struggle to rise much further above the psychologically key 17,000 mark.
"The Tokyo market is still in a rebound stage. It lacks energy to power further gains above 17,000."
The benchmark Nikkei .N225 ended the morning session up 171.02 points at 17,016.98. The index went above 17,000 for the first time since Aug 9.
The broader TOPIX index was up 1.4 percent at 1,637.93.
Trade picked up, with 1.04 billion hands changing hands, compared with last week's morning average of 876.2 million.
The dollar edged down to 115.45 yen JPY= from 115.68 yen in late New York trade, still within the range considered favourable for exporters.
Canon climbed 2.2 percent to 6,380 yen.
Sony Corp (6758.T) rose 2.5 percent to 5,790 yen after its financial unit set its IPO price at the top end of a preset range. The company said the sale of shares in the unit would boost its pretax profit by 78 billion yen and net profit by 14 billion yen.
Rival Matsushita Electric Industrial Co (6752.T) was also up 1.6 percent at 2,185 yen after the maker of Panasonic brand said it had sold all 17 of it large domestic distribution facilities to a real estate developer.
BANKS UP
Financial shares were firm on rising expectations that the worst may have been over for subprime problems.
Citigroup (C.N), the largest U.S. bank by market value, warned on Monday its third-quarter earnings will drop by 60 percent, but investors took comfort after its chief executive, Charles Prince, said the bank would "return to a normal earnings environment in the fourth quarter." [ID:nN01274872]
Mitsubishi UFJ gained 6.1 percent to 1,119 yen, and Sumitomo Mitsui Financial Group Inc (8316.T) was up 3.6 percent at 913,000 yen. Mizuho Financial Group Inc (8411.T) climbed 2.8 percent to 662,000 yen.
Meanwhile, IHI (7013.T) extended sharp losses and was down 9.3 percent at 255 yen after plunging 22 percent in the previous session following a shock loss warning.
Other plant shares rebounded. Chiyoda Corp (6366.T) firmed 0.3 percent to 1,999 yen and JGC Corp (1963.T) rose 0.7 percent to 2,150 yen.
