* Key moving averages around 10,250 support Nikkei-analyst
* Kawasaki Heavy jumps on report of China rail project
By Aiko Hayashi
TOKYO, Oct 26 (Reuters) - The Nikkei average rose 1 percent
on Monday, led higher by exporters such as Honda Motor Co
<7267.T> on a weaker yen, while Kawasaki Heavy <7012.T> jumped on
a report of a high-speed rail project in China.
Banking shares such as Japan's top lender Mitsubishi UFJ
Financial Group <8306.T> rose on short-covering, market players
said, while Japan Airlines <9205.T> gained after a report that a
state-backed body will oversee its turnaround.
"The market is optimistic about Japanese earnings as the
reporting season heads into full swing," said Kenichi Hirano,
operating officer at Tachibana Securities.
"The Nikkei's important technicals --its 75-day and 25-day
moving averages-- stand around 10,250 and that is also forming a
very strong support line."
In moderate trade, the benchmark Nikkei <> added 99.90
points to 10,382.89, after starting the day slightly lower,
tracking a fall on Wall Street.
The broader Topix <> advanced 1.3 percent to 913.29.
The dollar was trading around 92 yen <JPY=> in early Asia
trade. Many Japanese exporters have set their currency rate
assumptions at 90-95 yen for the year to March.
The Nikkei gained 0.2 percent last week, with investors
reluctant to actively take positions ahead of Japanese corporate
earnings and a raft of economic indicators in Japan and the
United States this week.
Steelmaker JFE Holdings Inc <5411.T> is among Japanese
companies set to report earnings later in the day.
On Thursday, Japan will announce its industrial output data
for September and the U.S. government is set to report its first
estimate on third-quarter gross domestic product.
EXPORTERS STRONG
Konica Minolta Holdings Inc <4902.T> shot up 5.6 percent to
924 yen, with a rating upgrade from Credit Suisse and its setting
of a higher target for costs cuts offsetting a downward earnings
revision on Friday. []
Honda advanced 3 percent to 2,890 yen, while Sony Corp
<6758.T> climbed 2.1 percent to 2,725 yen. Advantest Corp
<6857.T> added 0.8 percent to 2,390 yen.
JAL shares gained 1.8 percent to 116 yen, after opening
lower.
The Nikkei business daily said the Japanese government plans
to put a state-backed turnaround body in charge of the overhaul
of the struggling airline, underlining the government's deeper
involvement in the process. []
"JAL's stock price moves appear to be due to short-term
dealing --a bit like a game-- as market participants know the
company is unlikely to go bankrupt as it's a 'national flag'
carrier," said Fumiyuki Nakanishi, manager at SMBC Friend
Securities.
Liabilities at JAL would exceed its assets by as much as $8.8
billion if it were liquidated, a source close to the matter has
said, indicating the depth of the problem facing the airline as
it seeks aid from banks and the state to avoid bankruptcy.
Bank stocks recouped some ground, with Mitsubishi UFJ gaining
2 percent to 469 yen and the banking subindex <.IBNKS.T> rising
1.3 percent.
"JAL remains in a tough situation, but its outlook is no
longer full of uncertainty, prompting short-covering in banking
shares," said Hirano at Tachibana Securities.
Among stocks that fell, Chiyoda Corp <6366.T> plunged 12.6
percent to 694 yen after the plant engineering firm cut its
full-year operating profit forecast by 87 percent, hit by
additional costs booked for a project in Qatar.
Some 884 million shares changed hands on the Tokyo exchange's
first section, in line with last week's morning average.
Advancing stocks outnumbered declining ones by more than 4 to
1.
( Editing by Joseph Radford)
(aiko.hayashi@thomsonreuters.com; Reuters Messaging:
aiko.hayashi.reuters.com@reuters.net; +81 3 6441 1802))
