* Pierces crucial resistance levels
* BOJ decision has little impact
* Chip-related shares gain
By Ayai Tomisawa and Antoni Slodkowski
TOKYO, Jan 25 (Reuters) - Japan's Nikkei average climbed for
a second straight session on Tuesday, breaching key resistance
levels as it regained some of the ground lost last week.
The market showed little reaction to a decision by the Bank
of Japan to keep interest rates at practically zero.
The benchmark Nikkei <>, which traded around 10,470
after the BOJ's announcement, was primarily reacting positively
to rallies in other Asian markets, said Susumu Kato, chief
economist at Calyon Credit Agricole CIB.
Market participants said there was cautious optimism ahead of
earnings announcements by major Japanese companies this week but
it would be actual results and company guidance about long-term
growth potential that would decide if the benchmark maDe further
substantial gains.
Financials, property and high-tech shares were among the
biggest gainers, with foreign investors detected buying sectors
that had fallen prey to profit-taking last week.
Last Friday the Nikkei booked its biggest daily fall in two
months, mainly hit by worries about monetary tightening by China.
Canon Inc <7751.T> and Kyocera Corp <6971.T> as well as
Japan's biggest personal computer firm, NEC Corp <6701.T>, will
report this week, and could set the tone of the October-December
earnings season lasting until early February.
Many analysts expect robust results based on a pickup in the
global economy and demand in the United States, as well as a
slightly stronger dollar against the yen than many firms
expected.
They also say there will be more emphasis than usual on
company comments about longer-term growth prospects.
"Stocks have risen a lot over the quarter and strong earnings
are at least partly already priced in by investors, so they will
not only want to see the figures for the quarter but also how
those firms can sustain growth in the long run," said Masayoshi
Okamoto, head of dealing at Jujiya Securities.
Brokers have listed cost controls, structural changes,
exposure to growing Asian markets and foreign currency hedging as
focal points.
At 0431 GMT the benchmark Nikkei was up 1.1 percent at
10,456.77.
Some Asian markets were higher, with Hong Kong's Hang Seng
index <> gaining 0.5 percent and Seoul's KOSPI <> adding
0.8 percent.
The Nikkei breached two crucial resistance levels, its
closely watched 25-day moving average, now at 10,403.61, and then
10,420, where December futures and option prices settled.
The broader Topix <> added 1.3 percent to 929.30.
Makers of semiconductor manufacturing equipment were higher,
with Dainippon Screen <7735.T> rising 4.3 percent to 733 yen
after the Nikkei business daily reported the firm saw a 32
percent year-on-year increase in the value of orders in the
October-December quarter.
The report was also helping other shares in the sector, such
as Nikon, which makes steppers, said a trader who asked not to be
quoted by name.
Nikon Corp <7731.T> added 3.4 percent to 1,935 yen. Ibiden Co
<4062.T>, which supplies IC packages to Intel Corp <INTC.O>,
added 3.1 percent to 2,787 yen.
Banking shares staged a rally as buying by foreigners pushed
financial stocks higher, market participants said. Mitsubishi UFJ
Financial Group <8306.T>, Japan's largest bank by assets, rose
2.5 percent to 452 yen, while Sumitomo Mitsui Financial Group
<8316.T> added 1.9 percent to 2,949 yen. The banks were two most
actively traded shares on the main board.
The banking sector has gained 23 percent since November, but
is still considered undervalued as its price-to-book ratio stands
at 0.7, underperforming the average PBR of 1.2 for the Nikkei 225
components.
A share is seen as undervalued if the PBR is below 1.0.
Dividend yields at Japanese banks are also seen as more
attractive than other Nikkei components, as they stand at 2.8
percent compared with the average for the Nikkei of 1.6 percent.
"This rise is connected to valuations, but a lot of that is
simple buying back after those shares fell rapidly at the end of
last week," said Mitsuo Shimizu, deputy general manager at Cosmo
Securities.
But Resona Holdings <8308.T> fell 4.5 percent to 446 yen
after it said it would raise $6.6 billion in its global share
offering, less than expected, in a sign investors are sceptical
of the Japanese bank's growth prospects as it weans itself from
government control. []
TDK Corp <6762.T> rose 2.5 percent to 5,800 yen after the
Nikkei business daily reported it had developed a way to
manufacture miniature modules for smartphones that pack features
into a 30 percent smaller footprint.
($1=82.52 Yen)
(Editing by Michael Watson)
