*Nikkei rises 3.6 percent, biggest percentage gain in 5 mths
*Financial shares surge after bailout of Fannie, Freddie
*Exporters gain on soft yen, improved investor confidence
(Adds stocks, details)
By Aiko Hayashi
TOKYO, Sept 8 (Reuters) - The Nikkei average jumped 3.6
percent on Monday, its biggest percentage gain in five months,
with financial issues soaring on the U.S. government's bailout of
troubled mortgage finance companies Fannie Mae <FNM.N> and
Freddie Mac <FRE.N>.
Japan's biggest banks made double-digit gains, while Canon
Inc <7751.T> and other exporters powered higher on a softer yen
and improved investor sentiment, helping the benchmark to erase
the sharp losses it booked on Friday on the gloomy outlook for
the global economy.
"We seem to have hit bottom for now," said Takahiko Murai,
general manager of equities at Nozomi Securities.
"It's a huge step forward now that the U.S. government has
started taking drastic measures to deal with financial problems
-- one of the two problems we have faced along with the economy."
The takeover of the U.S. finance companies is the latest move
by Washington to shore up the slumping housing market and was
taken to ward off more global financial market turbulence.
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U.S. stock index futures surged on Sunday, pointing to a
sharply higher opening on Wall Street on Monday after the news.
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The benchmark Nikkei average <> added 438.04 points to
end the morning session at 12,650.27, the biggest percentage gain
since a 4.2 percent advance logged on April 2.
The broader Topix <> shot up 4 percent to 1,217.33.
The dollar climbed 0.7 percent to 108.55 yen <JPY=> and at
one point climed as high as 109.05 on EBS. Investors welcome a
softer yen as it boosts exporters' overseas profits when they are
brought home.
Still, Nozomi's Murai said further gains in the market may be
limited due to continuing worries about the global economy.
"The global economy won't recover right away simply because
the U.S. has started taking care of its financial problems."
FINANCIAL SHARES IN FAVOUR
Industry leader Mitsubishi UFJ Financial Group <8306.T>
soared 11.6 percent to 837 yen, while No.2 Mizuho Financial Group
<8411.T> shot up 11.4 percent to 460,000 yen and Sumitomo Mitsui
Financial Group <8316.T>, the third-biggest bank, jumped 11.1
percent to 650,000 yen.
The banking subindex <.IBNKS.T> surged 10.7 percent to become
the biggest positive contributor among subindices.
"Moves like this probably won't be limited to Japan, and we
may see similar advances in Chinese megabank shares, for
instance," said Masayoshi Okamoto, head of dealing at Jujiya
Securities.
Other financials also gained sharply, with Japan's biggest
brokerage Nomura Holdings <8604.T> up 9.1 percent at 1,492 yen
and Sumitomo Trust and Banking Co Ltd <8403.T> rising 15.3
percent to 677 yen.
Exporters also buoyed the overall market. Canon gained 3
percent to 4,770 yen and Toyota Motor Corp <7203.T> gained 4.6
percent to 4,970 yen.
Trade picked up on the Tokyo exchange's first section, with
968 million shares changing hands, above last week's morning
average of 859 million.
Advancing shares beat declining ones by nearly 14 to 1.
(Editing by Edwina Gibbs)
