* Market helped by foreign buying after BOJ moves -analysts
* MMC and Peugeot in talks that could mean capital tie-up
By Aiko Hayashi
TOKYO, Dec 3 (Reuters) - Japan's Nikkei average climbed more
than 3 percent to hit a three-week high on Thursday as exporters
such as Canon Inc <7751.T> jumped on a weaker yen, while metals
shares climbed after gold hit a new record.
Mitsubishi Motors Corp <7211.T> soared nearly 20 percent
after the Nikkei business daily reported that PSA Peugeot Citroen
<PEUP.PA> is in talks to spend up to 300 billion yen ($3.4
billion) to acquire a 30-50 percent stake. []
Mitsubishi Motors and Peugeot confirmed they were discussing
an expansion of their existing partnership that could end in a
capital tie-up, underscoring the intensifying pressure to
consolidate in the fiercely competitive auto industry.
Stocks of Mitsubishi Motors shareholders, such as trading
house Mitsubishi Corp <8058.T>, also climbed.
Market players said the overall market likely received a
boost from buying by foreign investors partly because they took
heart from recent moves by the government and the Bank of Japan
on the economy.
"Foreign investors are likely putting their money into the
Japanese market as the least risky place after Dubai's debt
problems revived worries about risk-taking and also after the BOJ
unveiled financial measures," said Hajime Nakajima, deputy
general manager at Cosmo Securities.
"But they are not really buying due to Japan's bright
economic prospects ... The market is also in a position to
attract foreign money this month after a decline in the weighting
of Japanese stocks in global allocations of their portfolios."
The benchmark Nikkei <> jumped 3.4 percent to 9,933.81,
its highest level since Nov. 12 and well above its 25-day moving
average around 9,700.
The broader Topix <> gained 3.1 percent to 885.15.
The BOJ said on Tuesday it would offer around 10 trillion yen
($114 billion) in three-month funds at 0.1 percent and keep its
key interest rate steady at 0.1 percent.
The central bank had surprised investors by calling an
emergency policy meeting in the face of government pressure to do
more to beat deflation. []
The yen extended its losses against the dollar on growing
investor speculation that Japan may take more quantitative easing
steps to get the economy out of deflation and on prospects for
potential currency intervention. []
The dollar gained 0.5 percent to 87.77 yen <JPY=>. Investors
fret about a stronger yen since it eats into exporter profits
when repatriated.
"The yen's fall against the dollar has set off
short-covering," said Takashi Ushio, head of the investment
strategy division at Marusan Securities.
"The Nikkei was oversold last week and so it was primed for a
rebound, and there are also hints that perhaps foreign buying may
be starting to pick up as well."
Finance Ministry data showed foreign investors bought a net
61.5 billion yen ($703 million) of Japanese stocks last week, and
orders placed through foreign securities houses in Tokyo showed
foreign brokers were set to be net buyers on Thursday.
MITSUBISHI MOTORS SOARS
Shares of Mitsubishi Motors Corp <7211.T> soared 17.7 percent
to 140 yen after news about the talks with Peugeot.
Car battery maker GS Yuasa Corp <6674.T> shot up 7.6 percent
to 684 yen on hopes for more demand, although Mitsubishi Motors'
existing tie-up with Peugeot in electric vehicles has already
secured GS Yuasa growing sales with the French auto group.
Mitsubishi Heavy Industries <7011.T> climbed 4 percent to 310
yen, Mitsubishi UFJ Financial Group <8306.T> gained 2.3 percent
to 497 yen and trading house Mitsubishi Corp <8058.T> rose 3.9
percent to 2,130 yen.
Exporters surged, with Honda Motor Corp <7267.T> up 4.4
percent at 2,990 yen and Canon gaining 4.2 percent to 3,490 yen.
Toyota Motor Corp <7203.T> climbed 4.5 percent to 3,720 yen.
Sumitomo Metal Mining <5713.T> and other metals shares gained
as gold rose to a record high and after copper climbed as well.
Sumitomo Metal Mining, a non-ferrous metal smelter, added 3.2
percent to 1,503 yen, and fellow smelter Dowa Holdings <5714.T>
gained 3.7 percent to 508 yen.
Among other notable stocks, Japan Tobacco Inc <2914.T> jumped
7.7 percent to 277,100 yen after the Mainichi newspaper reported
that the government's planned tobacco tax hike is likely to be a
lot smaller than some had feared.
Fast Retailing <9983.T> fell 1.8 percent to 16,030 yen after
news that sales at its Uniqlo casual-clothing chain rose 7.9
percent in November from a year earlier, much slower growth than
in the previous two months, when it posted surges of more than 30
percent. []
(Additional reporting by Elaine Lies; Editing by Michael Watson)
((aiko.hayashi@thomsonreuters.com; Reuters Messaging:
aiko.hayashi.reuters.com@reuters.net; +81 3 6441 1802))
((If you have a query or comment on this story send an email to
news.feedback.asia@thomsonreuters.com))
((Multimedia versions of Reuters Top News are now available for:
* 3000 Xtra : visit http://topnews.session.rservices.com
* BridgeStation: view story .134
* Reuters Plus: from your WebDSS screen For more information on
Top News, visit http://topnews.reuters.com))
