* Nikkei up 4.2 pct, jumping from 3-week low hit near 7,400
* Surge in U.S. stocks on Citi bailout spark short-covering
* Persistent concerns over financial sector limit gains
* Yen weakens beyond 96 yen per dollar, helps exporters
(Updates to midday)
By Rika Otsuka
TOKYO, Nov 25 (Reuters) - Japan's Nikkei average jumped 4.2
percent on Tuesday, as a surge in U.S. shares on Washington's
decision to rescue Citigroup <C.N> encouraged investors to buy
equities, with exporters such as Kyocera Corp <6971.T> bought
after the yen remained below last week's high.
Another big exporter, Honda Motor Co <7267.T>, rose 5.4
percent to 2,055 yen. Investors shrugged off Honda's plan to
build fewer cars in Japan, Europe and North America to reflect an
increasingly bleak outlook for sales as the global economic
crisis discourages big-ticket purchases. []
Wall Street soared on Monday, posting its best two-day run
since the aftermath of the 1987 stock market crash, as news of
the Citigroup bailout spurred an enormous relief rally.
[]
"A two-day rally in U.S. shares prompted market players to
cover short positions here," said Norihiro Fujito, general
manager of the investment research and information division at
Mitsubishi UFJ Securities.
The benchmark Nikkei <> rose 335.29 points to 8,246.08
by midday, rebounding from a three-week trough of 7,406.18 hit on
Friday.
The broader TOPIX index <> climbed 3 percent to 826.44.
Japanese financial markets were closed on Monday for a
national holiday.
Trade was light, with 918 million shares changing hands
compared to last week's morning average of 932 million. Advancers
outpaced decliners by nearly 3 to 1.
The stock market rallied strongly in early trade but soon
lost its momentum as investors hesitated to chase shares higher,
believing the U.S. government's massive bailout of Citigroup does
not mean an end to the financial crisis in the United States.
"Investors are likely to start wondering whether the U.S.
government may need to rescue other banks, spending more money
and boosting the budget deficit," said Yuuki Sakurai, general
manager of financial and investment planning at Fukoku Mutual
Life Insurance Co.
Shares in major banks rose across the board, following an
overnight leap in Citigroup's share price. Mitsubishi UFJ
Financial Group <8306.T>, Japan's largest bank, rose 3.5 percent
to 509 yen, while Sumitomo Mitsui Financial Group <8316.T> jumped
8.2 percent to 330,000 yen.
Investors picked up exporters on a weaker yen. Kyocera, the
world's No.4 solar cell maker, rose 4.4 percent to 4,940 yen,
while Advantest Corp <6857.T>, the world's No.1 maker of chip
testers, climbed 4.6 percent to 1,193 yen.
The yen traded at 96.70 yen per dollar <JPY=>, up slightly
from Monday but keeping some distance from a three-week peak hit
beyond 94 yen last week. []
(Reporting by Rika Otsuka)
