* BOJ ETF purchases lending support to market -analyst
* Foreign buying weaker as nuclear outcome, fundamentals
unclear-analyst
* Hitachi surges on plant restart report
* Electric and gas, banking shares down on nuclear woes
By Antoni Slodkowski
TOKYO, March 30 (Reuters) - Japan's Nikkei stock average
climbed 2 percent, hitting its highest level since a post-quake
panic sell-off as the yen softened against the dollar, but
investors said the gains may be short-lived as bargain-hunting
by foreigners peters out.
Market players said the Bank of Japan's purchases of
exchange-traded funds under an asset purchase programme adopted
to bolster the economy was also lending some support to the
market.
Inflows from passive funds and year-end window dressing by
institutional investors were also cited as reasons that pushed
the Nikkei considerably higher in afternoon trade.
But now that the benchmark has regained more than
half of the ground it lost in the post-quake rout, foreign funds
are buying less aggressively.
"Foreigners have stopped piling into shares on dips, and are
now mostly sidelined, waiting for more information on
fundamentals and further developments at the nuclear plant,"
said Hideyuki Ishiguro, a supervisor at Okasan Securities in
Tokyo.
By mid-afternoon the Nikkei gained 2.1
percent, or 196.50 points, to 9,656.79. The broader Topix index
advanced 1.3 percent to 860.93.
A stronger dollar lifted machinery stocks, electronics
makers and post-quake underperformers like Nissan Motor
, which surged 3.6 percent. Nissan has fallen more than
10.6 percent since the earthquake and tsunami hit northeast
Japan more than two weeks ago.
Both Nissan and Toyota Motor Corp , which have lost
a substantial amount of domestic production due to disruptions
in their supply chains, were among the most actively traded
shares by turnover on the Tokyo stock exchange's main board.
The worst performing sector was again electric and gas
with a 3 percent decline, as Tokyo Electric Power
dropped another 17.7 percent, adding to a slide to a
47-year low a day earlier as the government pondered whether to
nationalise the operator of a stricken nuclear
plant.[]
BANKS LOSE
The banking sector , down 12.6 percent since the
quake, was the second weakest performer on Wednesday.
Mizuho Financial Group faces an inspection by
financial authorities, pushing it 2.9 percent lower to 136 yen,
while other banks fell on worries over loans to Tokyo Electric.
"You have to look at all the banks that are lending to the
company. It's obvious that investors are going to look at their
situation with a huge dose of scepticism," said Norihiro Fujito,
senior investment strategist at Mitsubishi UFJ Morgan Stanley
Securities.
The banking sector was 1.1 percent lower on Wednesday.
Japanese shares have lost about 7.5 percent since the March
11 earthquake and tsunami, and a subsequent nuclear safety
crisis, triggered the biggest two-day rout in the market since
1987. In contrast, the MSCI index of Asian shares outside Japan
has gained 4.6 percent.
The dollar rose as a steady rise in U.S. yields gained
traction this week after several Federal Reserve policymakers
said the central bank would have to start tightening monetary
policy soon to avoid inflation.
Shares of Hitachi Ltd , one of the most severely hit
stocks after the quake, jumped 7.2 percent to 431 yen, helped by
a Nikkei newspaper report that the electronics giant had
partially resumed operations at its biggest factory complex with
output expected to return to pre-disaster levels next month.
[]
(Additional reporting by Chikafumi Hodo; Editing by Edwina Gibbs
and Edmund Klamann)
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