* Dai-ichi Life dives on M&A financing worries
* Nikkei resistance seen at 26-week moving avg - analyst
By Ayai Tomisawa
TOKYO, June 2 Japan's Nikkei share average
climbed to an eight-week high after strong Chinese factory data
and rising Japanese corporate spending lifted sentiment.
But Dai-ichi Life Insurance Co Ltd tumbled on news
that it is in talks to buy a U.S. life insurance company, with
investors wondering how the company would fund the acquisition.
The Nikkei was up 1.6 percent at 14,873.01 in
midmorning trade, its highest since April 7.
"Risk appetite has risen mainly on bright economic data from
China, but the direction for the month will likely depend on
other economic data like U.S. jobs figures this week," said
Hikaru Sato, a senior technical analyst at Daiwa Securities.
Whether the benchmark trades above its 26-week moving
average of 14,900 is a key for further gains, he added.
"If the Nikkei breaches this resistance level, we can be
hopeful that the Nikkei is on a rising trend," Sato said.
Chinese factory activity expanded at its fastest pace in
five months in May due to rising new orders, official data
showed on Sunday.
Meanwhile, Japanese firms raised spending on factories and
equipment in January-March by 7.4 percent from the same period
last year, government data showed on Monday.
Exporters advanced after the yen weakened slightly versus
the dollar, with Sony Corp up 2.2 percent, Toyota Motor
Corp adding 0.9 percent and Tokyo Electron Ltd
gaining 1 percent.
Dai-ichi Life dropped 4.8 percent and was the fourth
most-traded stock by turnover. The company, Japan's
second-largest private-sector life insurer by premium revenue,
is in advanced talks to buy Alabama-based Protective Life, a
source told Reuters.
"The acquisition itself is positive for the company in the
long term, but the market is wondering how the company will
finance it. Dilution fears from a possible share offering plan
hit investors' sentiment," said Mitsushige Akino, chief fund
manager at Ichiyoshi Asset Management.
The broader Topix added 1.2 percent to 1,216.41,
while the new JPX-Nikkei Index 400 advanced 1.3
percent to 11,082.11.
(Editing by Chris Gallagher)