*Nikkei up 2.8 percent, hits 3-week high
*Nikkei above key 25-day moving average
*Exporters gain on yen, trading firms up on oil prices
*Spotlight on U.S. presidential election
(Adds comment, details)
By Aiko Hayashi
TOKYO, Nov 5 (Reuters) - Japan's Nikkei average gained 2.8
percent by midday on Wednesday, at one point hitting a three-week
high, buoyed by exporters such as Honda Motor Co <7267.T> on a
softer yen and after U.S. stocks rose in the biggest election day
rally ever.
Energy-linked shares such as trading firms including
Mitsubishi Corp <8058.T> powered higher after oil prices <CLc1>
jumped more than 10 percent on Tuesday to above $70 a barrel on
signs that Saudi Arabia and other OPEC members had made cuts in
crude exports. []
Market participants were closely watching the results of the
U.S. presidential election. Polls close in parts of Indiana and
Kentucky at 6 p.m. EST (2300 GMT) and over the following six
hours in the other 48 states and in Washinton. []
Some warned that if Democrat Barack Obama wins, as widely
expected in the market, it could trim gains by Japanese shares as
important trading factors would be exhausted for now, coupled
with the fact that the Nikkei has gained more than 9 percent so
far this week.
The benchmark lost 24 percent in the month of October, the
biggest monthly fall in its 58-year history.
"What we are seeing is still a rebound. We may be coming
closer to the limit, though, as the situation hasn't really
changed," said Takahiko Murai, general manager of equities at
Nozomi Securities.
"Whoever becomes the next U.S. president, the focus has now
shifted to what kind of financial and economic steps he can take.
If we don't get that, the market could return to a correction
phase."
The benchmark Nikkei <> added 257.07 points to end the
morning at 9,371.67, above the key 25-day moving average. At one
stage it rose as much as 3.4 percent to hit its highest point
since Oct. 15.
The broader Topix <> climbed 4.5 percent to 951.88.
Opinion polls indicate Obama is running ahead of Republican
John McCain in enough states to give him more than the 270
electoral votes he needs to win.
"The U.S. election won't likely affect the direction of the
market as stock markets in Europe, the U.S. and Japan have
largely factored in a victory by Obama," said Tsuyoshi Segawa, an
equity strategist at Shinko Securities.
"But if McCain wins, we will need to brace for turbulence as
that's not priced in."
EXPORTERS, TRADING FIRMS GAIN
Exporters gained as investors welcome a softer yen, which
boosts exporters' overseas profits when they are brought home.
The dollar was steady against the yen at 99.78 yen <JPY=>,
after slipping to 99.45 yen earlier.
Honda surged 9.1 percent to 2,640 yen, while Canon Inc
<7751.T> soared 11.7 percent to 3,930 yen to become the top
positive contributor to the Nikkei 225.
Separately, Honda's chief financial officer told Reuters on
Tuesday that the automaker will lower auto loan rates in the
United States to help stem a slide in car sales but will not
follow rivals into zero-percent financing. []
Trading houses climbed as they are major dealers in energy
and also have stakes in oil and gas projects.
Mitsubishi, Japan's largest trading house, gained 5.6 percent
to 1,696 yen and Mitsui & Co <8031.T> jumped 9.6 percent to 1,014
yen.
Oil and gas field developer Inpex <1605.T> shot up 14.7
percent to 665,000 yen.
Shares of Sompo Japan Insurance Inc <8755.T> surged 13
percent to 816 yen after the non-life insurer said it was likely
to report first-half profits far above its forecast, buoyed by
smaller natural-disaster damages than previously estimated.
Among stocks that fell, Fast Retailing Co <9983.T> lost 6.8
percent to 10,240 yen, the top drag on the Nikkei 225.
The apparel retailer said on Tuesday that same-store sales at
its Uniqlo casual clothing chain in Japan fell 2.5 percent in
October, the first year-on-year decline in six months, hurt by
unseasonably warm weather.
Trade was moderate on the Tokyo exchange's first section,
with 1.3 billion shares changing hands, compared with last week's
morning average of 1.2 billion.
Advancing stocks outpaced declining ones by more than 7 to 1.
(Reporting by Aiko Hayashi; Editing by Michael Watson)
