* Nikkei rises 1.3 pct, Topix up 0.7 pct
* Yellen remarks fan hopes of dovish Fed policy down road
* Japan GDP up 1.7 pct in Q3, beats expectations
* Heavyweights lead gains, hedge funds buy futures
By Tomo Uetake
TOKYO, Nov 14 The Nikkei share average raced to
a three-week high on Thursday morning, supported by dovish
comments from Federal Reserve Vice Chair Janet Yellen and data
showing the Japanese economy notched up its fourth straight
quarter of growth.
Yellen, who is expected to take over Fed Chairman Ben
Bernanke, said the Fed has "more work to do" to help the
economy, suggesting she will be in no hurry to taper the central
bank's massive bond-buying stimulus.
The benchmark Nikkei rose 1.3 percent to 14,748.99
in mid-morning trade, its highest level since Oct. 23, after
easing 0.2 percent on Wednesday.
The broader Topix advanced 0.7 percent to 1,212.08
in moderate trade, with volume at 39.3 percent of its full daily
average for the past 90 trading days.
"We're in the best possible situation we could be. Risk-on
mode is back," said Mitsushige Akino, chief fund manager at
Ichiyoshi Asset Management. "Although the business sentiment was
improving in the United States, it seems like tapering is not on
the Fed's immediate to-do list."
Stocks were also helped by data showing Japan's economic
growth in the third quarter beat market expectations. Growth of
0.5 percent in the July-September quarter topped market
expectations of 0.4 percent, marking the fourth successive
quarter of expansion - the best run for the world's
third-largest economy in three years.
"I think there is relief in response to the GDP headline
number which was stronger than people were bracing for," said
Stefan Worrall, director of equity cash sales at Credit Suisse
"As U.S. stocks continue to rally to new highs, and the yen
has weakened again to the levels near 100 yen, there's a
significant positive risk of a resumption of the Japan rally."
The U.S. Dow and the S&P 500 ended at record
highs on Wednesday as strong results from Macy's buoyed
Heavyweight stocks in the Nikkei index led the charge.
"Buying is led by hedge funds buying Nikkei futures, rather
than real money investors. That in turn prompted arbitrage
players to buy Nikkei and sell broader Topix, thus boosting
Nikkei heavyweights," said Norihiro Fujito, a senior investment
strategist at Mitsubishi UFJ Morgan Stanley Securities.
Fast Retailing Co Ltd and Fanuc Corp
climbed 3.5 percent and 2.4 percent, respectively.
Fujito believes Japanese institutional investors are likely
to take profits near strong resistance around 14,800, possibly
limiting the broader market gain in the near-term.
Automakers bucked the market as the dollar slid to 99.39 yen
from a two-month peak of 99.80 yen set just few days ago.
A strong yen undermines Japanese exporters' competitiveness
abroad as well as profits when repatriated.
Toyota Motor Corp fell 0.5 percent and was the
fourth-most traded stock by turnover on the main board. Honda
Motor Co Ltd shed 0.8 percent and Mazda Motor Corp
retreated 0.2 percent.
The benchmark Nikkei is up 42 percent this year, supported
by the Japanese government's aggressive monetary and fiscal
stimulus steps to revive the long-stagnant economy.