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*Nikkei gains 5.8 pct, after 3.6 pct fall on Friday *Machinery stocks gain on hopes for China economic plan
*Exporters rise after Wall St gain, softer yen helps (Adds stocks, details) By Aiko Hayashi
TOKYO, Nov 10 (Reuters) - The Nikkei average gained 5.8 percent on Monday as China's nearly $600 billion economic plan helped boost investor confidence, encouraging buying of shippers and machinery firms such as Hitachi Construction Machinery. (6305.T) [ID:nN09395080]
Exporters such as Canon Inc (7751.T) also buoyed the market, helped by a softer yen and after Wall Street rebounded on Friday following a two-day sell-off, with investors snapping up shares in the wake of a drop in October payrolls data that was large but not as dire as had been feared. [.N]
"What we are seeing is largely short-covering after Toyota dragged down the market on Friday with a profit warning, but overseas markets ended higher. That has underscored the cheapness of Japanese stocks," said Masaru Hamasaki, a senior strategist at Toyota Asset Management.
"Hopes for the Chinese plan also helped the market, because if it succeeds in stimulating capital spending there it could support exports of capital goods from Japan."
In light trade, the benchmark Nikkei .N225 climbed 498.43 points to close at 9,081.43, after ending Friday down 3.6 percent.
The broader Topix .TOPX gained 4.3 percent to 916.65.
The dollar rose to 98.95 yen, up 0.7 percent from late U.S. trading on Friday. JPY=
Yutaka Miura, a senior technical analyst at Shinko Securities, said news of the Chinese government spending plan was positive, in addition to gains in U.S. stocks and a softer yen, seen as a reason for gains in Japanese stocks.
"But it's questionable if China could buoy the global economy as its economy is also supported by exports to Europe and the United States," he said.
"Unless the European and the U.S. economies improve, China cannot be the leader, though it may be able to provide some support in the meantime."
Players said the market had priced in poor Japanese machinery orders data.
The figures, released early on Monday, showed the biggest quarterly fall in a decade for July-September, with manufacturers expecting only a small rebound in the last quarter of the year -- boding ill for capital investment as the economy teeters on the brink of recession. [ID:nT17704]
Machinery stocks gained in spite of the data, with Hitachi Construction soaring 19 percent to 1,252 yen. Komatsu Ltd (6301.T) climbed 12 percent to 1,254 yen and Kubota Corp (6326.T) gained 16.9 percent to 547 yen.
Shippers gained after China's announcement on Sunday of its economic plan, which is focused largely on infrastructure and social projects, with the shipping sub-index .ISHIP.T surging 10.4 percent to become the biggest gainer among Tokyo's subindices.
Mitsui O.S.K. Lines (9104.T) shot up 12 percent to 523 yen and Nippon Yusen, (9101.T) Japan's largest shipping firm, jumped 9.9 percent to 500 yen, while steelmaker Nippon Steel Corp (5401.T) advanced 6.6 percent to 323 yen.
Exporters climbed, with Canon rising 5.2 percent to 3,440 yen and Honda Motor Co (7267.T) adding 4.7 percent to 2,365 yen.
So-called defensive shares such as drugmakers rose, as investors nervous about the global economic outlook bought shares seen as resilient in the face of economic slowdowns.
Another notable stock, Kawasaki Heavy Industries Ltd, (7012.T) soared 14.1 percent to 211 yen after the machinery maker said it had received orders for another 140 New York subway cars worth about $275 million.
Trade was light on the Tokyo exchange's first section, with 2.12 billion shares changing hands, compared with last week's daily average of 2.55 billion.
Advancing stocks outnumbered declining ones by nearly 6 to 1. (Reporting by Aiko Hayashi; Editing by Michael Watson)