* Nikkei up 3.5 pct, after 3-mth closing low hit on Monday
* Weaker yen helps exporters rebound
* Honda rises after report of capacity expansion in China
* Shipping firms gain on China hopes
(Adds stocks, details)
By Aiko Hayashi
TOKYO, Jan 27 (Reuters) - The Nikkei stock average climbed
3.5 percent on Tuesday after marking its lowest close in almost
three months the previous day, with exporters up on a softer yen
and Honda Motor <7267.T> jumping on a report it would expand
capacity in China.
Honda surged 6 percent after a newspaper said Japan's
second-biggest carmaker plans to increase production capacity in
China by 23 percent as it expects solid demand there for its
fuel-efficient vehicles. []
Mitsui O.S.K. Lines <9104.T> and other shipping companies
extended gains after a key freight index <.BADI> rose partly on
expectations that imports to China may start picking up as the
country carries out recently adopted economic stimulus policies.
"Coupled with gains in U.S. stocks and a halt in the yen's
appreciation, news about Honda's production hike in China is a
positive driver amid extremely pessimistic news about sharp
production cuts and slumping sales these days," said Fujio Ando,
senior managing director at Chibagin Asset Management.
But Tuesday's rebound may not last long as the corporate
earnings season gets into full swing in Japan, making investors
nervous about actively trading stocks. Nomura Holdings Inc
<8604.T>, Japan's top brokerage, is among companies due to report
results later in the day.
"The earnings season has just begun and I expect the market
to face tougher times next month, with the Nikkei average
possibly testing the October low," Ando said.
The benchmark Nikkei <> advanced 267.93 points to
7,950.07. It booked its lowest close since Oct. 28 on Monday,
when it briefly fell to 6,994.90, a 26-year low.
For the year to Monday, the benchmark Nikkei has lost more
than 13 percent on worries about a deepening global recession and
the fallout on corporate earnings. The slide comes on the heels
of the 42 percent tumble it booked in 2008.
The broader Topix <> gained 3.5 percent to 794.87.
"It's also significant that the European financial sector may
be stabilising after worries the U.S. financial woes had spread
to Europe hit the stock market hard last week," said Yoku Ihara,
manager at Retela Crea Securities.
European shares jumped on Monday as a 73 percent surge in
British bank Barclays <BARC.L> boosted embattled financials. The
bank said it had no need to raise capital and remained profitable
despite an 8 billion pound 2008 writedown. []
[]
The Dow Jones industrial average <> rose 0.5 percent amid
optimism over a $68 billion takeover in the drug industry. []
HONDA, OTHER EXPORTERS GAIN
The dollar was trading around 89.40 yen <JPY=>, after falling
as low as 87.10 yen last week, the lowest since July 1995.
Investors welcome a weaker yen as it boosts exporters' overseas
profits when repatriated.
Exporters jumped, with industrial robot maker Fanuc Ltd
<6954.T> adding 3.7 percent to 5,310 yen and electronics parts
maker Kyocera Corp <6971.T> climbing 4.3 percent to 6,050 yen.
Honda shares jumped to 2,060 yen, while bigger rival Toyota
Motor Corp <7203.T> gained 5.6 percent to 2,910 yen.
Mitsui O.S.K. Lines shot up 6.4 percent to 586 yen and Nippon
Yusen <9101.T>, Japan's largest shipping firm, climbed 6.3
percent to 492 yen.
Among other notable stocks, Asahi Breweries Ltd <2502.T> rose
6 percent to 1,428 yen after Morgan Stanley lifted its rating on
the brewer to "overweight" from "equal-weight", saying cheaper
raw materials, a lower tax rate and other expected positive
factors for 2010 have not been priced into the stock.
But Ebara <6361.T>, a top manufacturer of industrial pumps,
tumbled 12.8 percent to 164 yen after slashing its net profit
forecast from zero to a loss of 70 billion yen ($786.5 million),
saying poor economic conditions had forced customers to postpone
infrastructure spending.
Trade was active on the Tokyo exchange's first section, with
908 million shares changing hands, compared with last week's
morning average of 824 million.
Advancing stocks outnumbered declining ones by 7 to 1.
($1=89.00 yen)
(Reporting by Aiko Hayashi; Editing by Brent Kininmont)
