Japan stocks at 2-week high as banks, exporters up

TOKYO, Nov 29 (Reuters) - Japanese stocks were at a two-week high on Thursday, rising nearly 3 percent at one point on a Wall Street rally, expectations of a U.S. interest rate cut and a softer yen that boosted exporters such as Canon Inc (7751.T). Financial stocks including Japan's top bank Mitsubishi UFJ Financial Group (8306.T) also powered higher after their U.S. peers helped lead the U.S. rally.

Comments by U.S. Federal Reserve Vice Chairman Donald Kohn raised expectations of an interest rate cut in December and boosted U.S. stocks, and this sentiment was still going strong in Tokyo.

"Though it's of course far from clear that there will be a rate cut, the feeling the market got is that the Fed is prepared to step in and enact policy if needed," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.

The dollar was hovering around 110 yen JPY=, down from the high of 110.48 yen touched in late U.S. trade on electronic trading platform EBS.

Tokyo shares were also getting a slight boost from news that Ping An Insurance (Group) Co (2318.HK), China's No. 2 life insurer, had paid 1.81 billion euros ($2.7 billion) for a stake in Europe's Fortis (FOR.AS) (FOR.BR). [ID:nHKG334017] On Monday, Tokyo stocks jumped on a report that a Chinese fund was likely to buy Japanese shares. The fund later said it had yet to decide where to invest. "Today's report about Fortis suggests that China is in fact seeking investments abroad and supports the news report earlier this week," Yamagishi said. "Foreign investors have long been a driving force for Japanese stocks, but up to now these have been mainly U.S. and European investors. Now the market has hopes of money from China and other places, and this is lending support."

The benchmark Nikkei .N225 was up 2.3 percent at 15,499.66, a gain of 345.88 points, after climbing earlier to nearly a 3 percent rise.

The broader TOPIX was up by 2.5 percent at 1,512.09, a gain of 36.37 points.

Shares of Canon were up 2.8 percent to 5,840 yen and Sony Corp (6758.T) rose 1.8 percent to 6,050 yen, while Toyota Motor Corp (7203.T) jumped 3.7 percent to 6,230 yen and Honda Motor Co Ltd (7267.T) gained 3.9 percent to 3,740 yen.

Canon, the leading printer and copier manufacturer, said it would spend 140 billion yen ($1.27 billion) to boost its capacity to make toner cartridges, confirming an earlier news report. [ID:nTKV002888]

Bank shares surged, with Mitsubishi UFJ up 5.4 percent at 1,069 yen, while No. 2 Mizuho Financial Group (8411.T) jumped 5.2 percent to 586,000 yen and Sumitomo Mitsui Financial Group (8316.T), Japan's third-biggest bank, climbed 4.4 percent to 919,000 yen. (Reporting by Elaine Lies; Editing by Mike Miller)