Nikkei hits 6-wk high as blue-chips, financials rise

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By Elaine Lies

TOKYO, Feb 27 (Reuters) - Japan's Nikkei average touched a fresh six-week high on Wednesday, boosted by the buying of blue-chip shares such as Honda Motor Corp (7267.T) after the announcement of an IBM (IBM.N) share buyback lifted Wall Street.

Mizuho Financial Group (8411.T) and other financials rose as well, bolstered by growing relief that U.S. bond insurers appeared to be stabilising, while record-high oil prices lifted oil distributors and similar shares.

International Business Machines Corp said it planned to buy back $15 billion of its shares, equal to about 10 percent of its market capitalisation, which it said could boost 2008 earnings per share. [ID:nN26453118].

The news lifted Wall Street due to the company's confidence it could continue generating cash in tough economic conditions.

"At this point, the IBM news is helping Tokyo by lifting blue-chip shares, not necessarily just techs, in the wake of the Wall Street rise," said Masayoshi Okamoto, head of dealing at Jujiya Securities.

"Mainly, though, the market here just wants to rise, so it will seize on any sort of good foreign news like this."

A growing sense of reassurance about U.S. bond insurers after Moody's confirmed the debt rating of MBIA Inc (MBI.N) helped boost financial shares, though some in Tokyo warned that it was far too soon to declare the problem solved.

"The stability changes the mood regarding the monoline companies (bond insurers) a bit, and it will be positive for the market over the short term, but this is not a real solution," said Noritsugu Hirakawa, a strategist at Okasan Securities

The benchmark Nikkei .N225 was up by 1.4 percent at midsession at 14,016.44, after earlier rising nearly 2 percent to hit 14,078.51, its highest since Jan. 15, before profit-taking kicked in. The broader TOPIX index was up 1.3 percent at 1,364.26.

BANKS, BLUE CHIPS BOLSTERED

The market has worried that downgrades of bond insurers could set off selling of the debt they have guaranteed, potentially leading to further writedowns in the global financial sector and worsening a global credit squeeze.

Growing relief helped lead banks higher, with Mizuho up 2.9 percent at 469,000 yen and Sumitomo Mitsui Financial Group (8316.T) gaining 1.8 percent to 813,000 yen. Mitsubishi UFJ Financial Group (8306.T) rose 1.3 percent to 998 yen.

Japan's largest non-life insurer, Millea Holdings Inc (8766.T), rose 2.2 percent to 4,170 yen. Sompo Japan Insurance (8755.T) gained 2.6 percent to 1,007 yen.

Blue-chip exporters climbed, with Honda up 2.7 percent at 3,490 yen, becoming the second-largest contributor to the Nikkei's rise by volume weight. Sony Corp (6758.T) rose 2.3 percent to 5,320 yen and Toyota Motor Corp (7203.T) was up 1.3 percent at 6,050 yen.

Oil held over $101 yen a barrel in Asian trade, with U.S. crude CLlc1 at $101.08 at 0221 GMT.

Showa Shell Sekiyu (5002.T), a major oil distributor, was up 2.9 percent at 1,054 yen and fellow distributor Nippon Oil Corp (5001.T) gained 2.2 percent to 746 yen. Oil field developer Inpex Holdings (1605.T) gained 2.5 percent to 1.21 million yen.

Heavy machinery maker IHI Corp (7013.T) was down but off earlier lows after a newspaper said top executives knew of losses at a key division before it issued corporate bonds last year -- a report the company denied.

IHI was down 7.3 percent at midsession at 216 yen after hitting a low of 205 yen earlier.

Trade picked up on the Tokyo exchange's first section, with 1 billion shares changing hands compared with last week's morning average of 961 million. Advancing stocks outnumbered decliners by a ratio of nearly five to one. (Reporting by Elaine Lies, Editing by Michael Watson)