April 27, 2009 / 1:22 AM / 10 years ago

Nikkei gains 1.5 pct on U.S. hope, Shinsei jumps

* Shinsei Bank, Aozora Bank shares soar on merger news

* Chugai shoots up on hope for flu drug amid swine flu fear

TOKYO, April 27 (Reuters) - Japan’s Nikkei average rose 1.5 percent on Monday, buoyed by Shinsei Bank (8303.T) on news of its merger talks with Aozora Bank (8304.T), while Chugai Pharmaceutical (4519.T) jumped on hopes for its flu drug as worries grew about an outbreak of swine flu.

Analysts said fears of a global flu pandemic helped dampen overall investor confidence, with new infections confirmed in the United States and Canada on Sunday, and millions of Mexicans staying indoors to avoid a virus that has already killed around 80 people. [ID:nN26482522]

U.S. stocks gained on Friday on optimism about the U.S. economy but stock futures SPc1 fell more than 1 percent by early Monday morning, limiting further gains in the market.

“Better-than-expected results by some U.S. companies and receding fears about the global financial system are helping the Tokyo market,” said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.

“But worries about swine flu are weighing on market sentiment as it may require governments to come up with steps to tackle it, on top of economic measures. What’s worrisome is that infections seem to have spread not only in Mexico but in the U.S. and Europe.”

The benchmark Nikkei .N225 climbed 132.54 points to 8,840.53. It fell 1.6 percent on Friday and shed 2.2 percent on the week.

The broader Topix .TOPIX gained 1.6 percent to 843.70.

Shares of Shinsei Bank surged 10.5 percent to 137 yen, while Aozora Bank shot up 17.8 percent to 139 yen, after people familiar with the matter said on Saturday the two are in talks to merge and create Japan’s sixth-largest bank. [ID:nBNG449002]

Sumitomo Mitsui Financial Group (SMFG) (8316.T) climbed 4.2 percent to 3,220 yen after sources said the bank had gained exclusive negotiating rights to buy Citigroup Inc’s (C.N) retail brokerage and part of its investment banking operations in Japan. [ID:nT347304]

Stocks linked to worries about swine flu stood out.

Chugai, which distributes flu drug Tamiflu through its partnership with developer Roche ROG.VX, soared 16.5 percent to 1,885 yen. (Reporting by Aiko Hayashi; Editing by Michael Watson)

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