Nikkei hits 7-week closing high on U.S. bank hopes

* Nikkei jumps 3.4 pct, posts highest close in 7 weeks

* Optimism about U.S. financial plans helps buoy market

* Exporters gain on a weaker yen

* Buying linked to fiscal year-end seen supporting gains

By Rika Otsuka

TOKYO, March 23 (Reuters) - Japan's Nikkei jumped 3.4 percent on Monday to post its highest close in seven weeks, with banks including MUFG 8306.T jumping on optimism about U.S. plans to help a strained financial system, while a weaker yen helped exporters.

The United States on Monday offered generous financing for private investors to help cleanse banks of up to $1 trillion in toxic assets that are blocking lending and worsening a deep U.S. recession. [ID:nSP429491]

The news encouraged investors to take more risks, igniting a broad-based rally in Tokyo stocks.

“Investors bet the U.S. government won’t disappoint them again with its measures to stabilise the U.S. financial system,” said Tsutomu Yamada, a market analyst at Securities. “That has prompted market participants to buy back stocks.”

The benchmark Nikkei .N225 gained 269.57 points to 8,215.53, its highest close since Jan. 29.

The broader Topix .TOPX added 3.5 percent to 791.56, its highest finish since Feb. 4.

Hopes for the U.S. plan boosted U.S. stock futures SPc1 by nearly 2 percent.

Many Japanese investors close their books at the end of this month, prompting institutions such as pension funds to buy to prop up stock prices.

“Investors find it hard to sell off stocks now and the Nikkei will likely consolidate around 8,000, at least until the G20 meeting in April,” said Yumi Nishimura, manager at Daiwa Securities SMBC.


Shares of Mitsubishi UFJ Financial Group (MUFG), Japan’s biggest bank, jumped 4.7 percent to 512 yen. It said on Monday it planned to close 50 branches and cut 1,000 jobs to continue slimming down its operations since its 2005 merger, as a tumbling stock market depletes its earnings. [ID:nT168347]

No.2 Mizuho Financial Group 8411.T gained 5.3 percent to 220 yen and third-ranked Sumitomo Mitsui Financial Group 8316.T shot up 7.3 percent to 3,800 yen.

Japanese energy-linked shares such as trading firm Mitsubishi Corp 8058.T jumped after oil prices rose more than 1 percent towards $53 a barrel CLc1 on expectations that the U.S. Treasury's efforts to stabilise the ailing financial system could speed up a recovery in the U.S. economy. [O/R]

Mitsubishi rose 7.7 percent to 1,323 yen.

Oil and gas field developer Inpex 1605.T climbed 6.7 percent to 730,000 yen.

Exporters gained as the dollar was trading around 96.15 yen JPY=, after falling as far as 93.55 on Thursday. [FRX/] Investors welcome a weaker yen as it boosts exporters' profits when repatriated.

Electronics parts maker Kyocera Corp 6971.T added 3.8 percent to 6,820 yen, while industrial robot maker Fanuc Ltd 6954.T advanced 4.1 percent to 6,890 yen. The two stocks were the top positive contributors to the Nikkei 225.

Trade was active on the Tokyo exchange’s first section, with 2.4 billion shares changing hands, compared with last week’s daily average of 2.2 billion.

Advancing stocks outpaced declining ones by 12 to 1. (Additional reporting by Aiko Hayashi; Editing by Chris Gallagher)