Japan stocks up 2 pct buoyed by exporters, banks

By Aiko Hayashi

TOKYO, Nov 29 (Reuters) - Japan's Nikkei average jumped more than 2 percent on Thursday to its highest in two weeks, led by exporters such as Canon Inc (7751.T) on a softening yen and a Wall Street surge on rate cut expectations.

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.

"A drop in oil prices, a gain in the dollar and a surge in New York stocks all present favourable ingredients for the jump (in the Tokyo market)," said Tsuyoshi Segawa, an equity strategist at Shinko Securities.

"But the morning session will not determine the direction of the day's trade. Investors later will likely move in a way to factor in expected overnight moves in New York."

The Nikkei .N225 finished the morning session up 2.4 percent or 361.02 points at 15,514.80, after hitting its highest point since Nov. 15.

The broader TOPIX index climbed 2.7 percent to 1,515.15, after hitting its highest level since Nov. 9.

The dollar hovered around 109.95 yen JPY=, edging down 0.1 percent from late U.S. trade on Wednesday, when it rose as high as 110.48 yen on trading platform EBS.

The Dow Jones industrial average .DJI notched up its biggest percentage gain in 4-½ years on Wednesday, after comments by a Federal Reserve official raised expectations for an interest rate cut in December.

Katsuhiko Kodama, a senior strategist at Toyo Securities, said investors started sensing a slight shift in the flow of money in the market and found it harder to let go of stocks easily.

Earlier this week, Dubai International Capital, a private equity company owned by the ruler of Dubai, said it has made a "substantial investment" in Sony Corp (6758.T).

The Nikkei business daily, citing unnamed company sources, reported this week that China Investment Corp (CIC), Beijing's new $200 billion sovereign wealth fund, had begun trying to recruit strategists specialising in Japanese stocks and other investment products.

"For the world's rich, the oversold Japanese market is a great target," Kodama said.

EXPORTERS, BANKS UP

Exporters led the gains, as a weaker yen boosts profits when earnings from abroad are brought home.

Shares of Canon climbed 3 percent to 5,850 yen and Sony Corp (6758.T) rose 2.4 percent to 6,080 yen, while Toyota Motor Corp (7203.T) jumped 4.5 percent to 6,270 yen and Honda Motor Co Ltd (7267.T) gained 4.2 percent to 3,760 yen.