* Dlr/yen around 90 yen helps exporters recoup ground
* Kobe Steel jumps after report to raise copper strip output
* Deflation worries likely cap further market gains -analyst
By Aiko Hayashi
TOKYO, Sept 29 (Reuters) - Japan's Nikkei average rose 1
percent on Tuesday, with exporters such as Kyocera Corp <6971.T>
rebounding after the yen pulled back from an eight-month high
against the dollar.
The yen gave up some of its gains after Japanese finance
minister Hirohisa Fujii appeared to backtrack on comments
suggesting he was comfortable with the yen's recent strength.
The dollar recovered to around 90 yen after dropping to as
low as 88.23 yen <JPY=> on Monday.
Many exporters have set rate assumptions around 90-95 yen.
"Dollar/yen moves have calmed down a bit, helping the market.
But investors are increasingly taking a wait-and-see approach as
moves in the currency market remain unstable," said Fumiyuki
Nakanishi, manager at SMBC Friend Securities.
"The rebound is also likely to be limited because of growing
worries about deflation. Deflation is not good for the stock
market as it pressures corporate profits."
Data showed that Japanese core consumer prices fell a record
2.4 percent in August from a year earlier, as weak final demand
adds to pressure from a slide in oil prices, raising questions
about the Bank of Japan's view that deflation will not warrant
more policy action. []
In light trade, the benchmark Nikkei <> gained 95.16
points to 10,104.68. The index slid 2.5 percent the previous day
to mark its lowest close since July 24.
The broader Topix <> added 0.3 percent to 905.24.
Kobe Steel Ltd <5406.T> shot up more than 7 percent after the
Nikkei business daily said the steel maker will boost production
of copper strip products to 5,000 tonnes a month, restoring
output to a peak hit in the spring of 2008.
U.S. stocks rallied on Monday to snap a three-day losing
streak, as a spurt of corporate takeovers in the technology and
health-care sectors fuelled optimism about share values. []
EXPORTERS RECOVER GROUND
The impact of a stronger yen on earnings of exporter
companies is a concern for market players as a stronger Japanese
currency eats into exporters' profits when they are repatriated.
Electronics parts maker Kyocera advanced 2.4 percent to 8,270
yen and industrial robot maker Fanuc Ltd <6954.T> gained 2.8
percent to 7,990 yen.
Honda Motor Co <7267.T> added 1.9 percent to 2,725 yen.
Kobe Steel jumped 7.3 percent to 162 yen.
Among other notable stocks, nonferrous metal manufacturer
Dowa Holdings Co Ltd <5714.T> climbed 5.5 percent to 556 yen
after Mitsubishi UFJ Securities initiated coverage of the
company's shares with a target price of 690 yen.
"We think the company's business strategy -- which aims to
transform Dowa from a conventional nonferrous metals company into
a recycling-oriented company -- gives it substantial potential
for longer-term growth," Mitsubishi UFJ Securities analyst
Akihiro Omura said in a research note issued the previous day.
Shares of Weathernews Inc <4825.T> slumped 11.9 percent to
1,401 yen after the provider of meteorological information
reported a 40 percent year-on-year fall in net profit for the
June-August quarter on a 9 percent drop in revenues.
[]
Some 875 million shares changed hands on the Tokyo exchange's
first section, below last week's morning average of 1 billion.
Declining stocks outnumbered advancing ones, 903 to 624.
(Editing by Edwina Gibbs)
