* European GDP figures further help investor confidence
* Brokerage upgrades dominate market moves in holiday season
* Trend Micro, Hitachi Construction jump on rating upgrades
* Market up-trend continues but profit-taking likely
By Aiko Hayashi
TOKYO, Aug 14 (Reuters) - Japan's Nikkei average hit its
highest point in 10 months on Friday, with investor confidence
further reinforced after Western Europe's two largest economies
reported a surprising return to growth in the second quarter.
Germany and France ended their recessions in April-June,
earlier than many policymakers and economists had expected,
though U.S. data on retail sales and jobs disappointed.
[] []
In a light news week due to the summer holiday season in
Tokyo, ratings changes by brokerages dominated moves in the
market.
Trend Micro <4704.T> jumped after Nomura Securities hiked its
rating on the maker of computer antivirus software to "buy" from
"neutral", while Hitachi Construction Machinery <6305.T> surged
after Mitsubishi UFJ Securities raised its rating.
"The positive figures out of Germany and France are still a
favourable factor for the market, though such prospects had been
somewhat priced in during the global market rally over the past
month," said Soichiro Monji, chief strategist at Daiwa SB
Investments.
"The upward trend continues but the market will likely move
in a very narrow range going into next week as it's been
overbought in terms of technicals and profit-taking pressure will
likely emerge."
In active trade, the benchmark Nikkei <> rose 1.1
percent or 110.44 points to 10,627.63, after climbing as far as
10,630.38, its highest level since Oct. 6. Volume was boosted
mostly by trade related to the settlement of Nikkei options
contracts.
The broader Topix <> added 0.7 percent to 975.43.
The Standard & Poor's 500 Index <.SPX> gained 0.7 percent on
Thursday after Wal-Mart posted better-than-expected quarterly
earnings as a clampdown on inventory offset falling sales, and it
forecast a full-year profit that could beat Wall Street
estimates. []
The market shrugged off the U.S. Commerce Department report
that retail sales fell 0.1 percent in July, defying market
expectations of a gain.
Other data showed the number of workers filing initial
applications for unemployment benefits rose by 4,000 to a
seasonally adjusted 558,000. Economists had anticipated a drop.
[]
"The general trend of economic recovery hasn't changed," said
Kazuhiro Takahashi, general manager at Daiwa Securities SMBC.
"The market simply reaffirmed the fact that consumer spending
and employment haven't really caught up with the recovery
momentum yet."
BROKERAGE UPGRADES HELP BUOY THE MARKET
Hitachi Construction Machinery <6305.T> soared 9.3 percent to
1,947 yen after Mitsubishi UFJ lifted its rating on the
construction machinery maker to "2" from "3" and set its target
price at 2,000 yen, citing cost cuts as well as recovery in the
Chinese and Indonesian markets since June.
Trend Micro gained 3.8 percent to 3,530 yen after Nomura
Securities raised its rating and lifted its target price to 4,000
yen from 3,000 yen. It cited new product launches and an early
recovery from the recession as companies prioritise security
investment.
Trading house Marubeni <8002.T> climbed 4.7 percent to 466
yen after Goldman Sachs upgraded it to "buy" from "neutral",
saying it saw the company overshooting guidance for the year to
March on stable growth in its food business and its overseas
independent power producer business.
Among other notable stocks, Digital Garage Inc <4819.Q>
rocketed 10.5 percent to 105,500 yen after the Tsutaya movie
rental chain operator, Culture Convenience Club Co Ltd <4756.T>,
said it plans to buy up to 5 percent of Digital Garage shares by
the year-end.
Some 1.1 billion shares changed hands on the Tokyo exchange's
first section, above last week's morning average of 962 million.
Advancing stocks outnumbered declining ones, 992 to 509.
(Editing by Chris Gallagher)
