Nikkei climbs as yen boosts exporters; techs strong

(Updates to midmorning)

TOKYO, Jan 6 (Reuters) - Japan's Nikkei average climbed 0.7 percent on Tuesday, the first full trading day of 2009, as Canon Inc (7751.T) and other exporters rose on a weaker yen and hopes for the U.S. administration taking office later this month.

Market participants said investors were still keen to buy shares that had been sold off heavily last year, helping them discount dismal news.

"Growing expectations for the administration of (U.S. President-elect Barack) Obama are making investors that much more willing to take risks, and I think we're also seeing more buying by foreign investors," said Hideyuki Ishiguro, supervisor at the investment advisory department of Okasan Securities. "It's a fact that foreign orders are increasing, and I think the more established stock markets have greater liquidity than those of emerging markets."

Toyota Motor Corp (7203.T) rose in line with the broader market despite posting a 37 percent drop in U.S. sales in December, its worst decline since at least 1980. [ID:nL5118725]

It also said it plans to halt production at all of its plants in Japan for a total of 11 days in February and March.[ID:nT158]

The benchmark Nikkei .N225 climbed 58.48 points to 9,101.60, while the broader Topix was up 0.1 percent to 877.11.

Wall Street slipped on Monday as investors moved to lock in profits, but Ishiguro said that Tokyo shares were supported by a sense that they remained relatively cheap. The Nikkei lost 42 percent in 2008, its worst year ever.

Others, though, warned that gains could be limited.

"The Nikkei has gone up for five trading days, and there's a sense the market may be a bit overheated, with investors moving to lock in profits," said Hiroichi Nishi, general manager at the equity division of Nikko Cordial Securities.

"The market is waiting for U.S. jobs data on Friday, which are expected to be pretty severe, but hope for the new U.S. administration will keep the downside solid for now."

Canon climbed 2.7 percent to 2,905 yen, making it the fourth-largest contributor to the Nikkei 225 by volume weight. Sony Corp (6758.T) rose 1.8 percent to 2,010 yen and Hitachi Ltd (6501.T) rose 3.9 percent to 378 yen.

Toyota climbed 0.7 percent to 3,030 yen.

Okasan's Ishiguro said that the market had to some extent factored in predictions of bad results for high-tech firms in the current quarter and investors were buying on expectations of a recovery in the second half of the year.

Kyocera (6971.T) rose 3.2 percent to 6,800 yen and Advantest Corp (6857.T) climbed 3 percent to 1,551 yen. Tokyo Electron (8035.T) gained 2.1 percent to 3,360 yen.

Investors were already moving to lock in profits on trading houses, which had surged on Monday as oil prices rose, despite still further increases after Tokyo trading hours.

Oil prices rose 5 percent on Monday as Israel's deepening incursion into Gaza in response to Hamas rocket attacks and a dispute between Russia and Ukraine over natural gas heightened fears of supply disruptions. [O/R]

Mitsubishi Corp (8058.T) erased early gains to fall 1.4 percent to 1,332 yen, while fellow trader Mitsui & Co (8031.T) lost 0.9 percent to 970 yen. Itochu Corp (8001.T) fell 0.9 percent as well, to 464 yen.

Oil and gas field developer Inpex (1605.T) lost 1.8 percent to 708,000 yen. (Reporting by Elaine Lies; Editing by Edwina Gibbs)