Nikkei rises 2.2 pct on banks, Nippon Steel jumps

                                
   * Banks climb amid growing hope US lenders stabilising
                                
* Nippon Steel jumps on smaller-than-expected price cut report
                                
* High-tech exporters up on industry hopes after Google, Nokia
                                
 By Aiko Hayashi
                                
 TOKYO, April 17 (Reuters) - Japan's Nikkei average rose 2.2
percent on Friday as banks climbed after reassuring earnings from
JPMorgan, while steelmakers surged on a report that Nippon Steel
<5401.T> had negotiated a smaller-than-expected price cut with
Toyota Motor Corp <7203.T>.
                                
 Sony Corp <6758.T> and other high-tech shares advanced after
Google Inc's <GOOG.O> quarterly profit topped expectations and
world's top cellphone maker Nokia <NOK1V.HE> said it saw signs of
stabilising demand. [ID:nN16272680] [ID:nLG183354]
                                
 "Investors are beginning to harbour hopes that the high-tech
industry may be bottoming out. Although demand hasn't exactly
turned positive, there are signs that it is not shrinking as
much," said Takahiko Murai, general manager at Nozomi Securities.
                                
 Major steelmakers jumped around 9 percent after a newspaper
said the steelmaker and its peers had agreed to a price cut of
more than 10 percent for the current financial year.
[ID:nT286976]
                                
 The benchmark Nikkei <.N225> climbed 194.29 points to
8,949.55, while the broader Topix <.TOPIX> added 1.8 percent to
847.08.
                                
 But gains were capped amid caution ahead of Citigroup's <C.N>
quarterly results later in the day.
                                
 "After gaining in the morning, the Nikkei will probably hover
around the 9,000 mark as it's hard to go above that level before
Citigroup's earnings and the weekend," said Yutaka Miura, a
senior technical analyst at Shinko Securities.
                                
 JPMorgan's results beat analysts' expectations as debt
trading and underwriting revenue surged, fuelling hopes that the
banking sector is stabilising. [ID:nN16542451]
                                
 That added to a string of encouraging results from other
banks, including Wells Fargo's <WFC.N> strong preliminary figures
last week.
                                
 "At least until the announcement of the results of (bank)
'stress tests' on May 4, the market probably won't sell off bank
shares. Also, considering what we have seen so far about U.S.
banks earnings, the market doesn't expect Citigroup to post
surprisingly bad figures," said Murai.
                                
 A U.S. Federal Reserve official said on Thursday that results
of "stress tests" designed to see how the 19 largest U.S. banks
would fare should the recession prove unexpectedly severe, would
be made public on May 4. [ID:nN16267186]
                                
 BANKS CLIMB, STEELMAKERS STRONG
                                
 Nippon Steel's surged 9 percent to 341 yen, while JFE
Holdings <5411.T> shot up 9.4 percent to 2,955 yen and Kobe Steel
<5406.T> climbed 8 percent to 175 yen.
                                
 "The size of the price reduction is far smaller than
expected," Mizuho Securities analyst Hiroshi Matsuda said. "It is
hard to understand why Toyota would agree to this price."
                                
 Among banks, top lender Mitsubishi UFJ Financial Group
<8306.T> advanced 1.2 percent to 511 yen, while No.2 Mizuho
Financial Group <8411.T> rose 1 percent to 194 yen and Sumitomo
Mitsui Financial Group <8316.T> climbed 2.4 percent to 3,000 yen.
                                
 Exporters rose after Google's <GOOG.O> results, though Chief
Executive Eric Schmidt said the economic environment remains
tough with users still searching but buying less.
                                
 Canon Inc <7751.T> advanced 2.2 percent to 3,050 yen, while
Panasonic Corp <6752.T> gained 3.6 percent to 1,358 yen and
Toyota Motor Corp <7203.T> climbed 3.2 percent to 3,830 yen.
                                
 Sony Corp <6758.T> jumped 5.7 percent to 2,585 yen, after
Google's YouTube said it had reached a deal to post Sony films
and TV shows and was talking with other big studios to ramp up
content and attract more advertising. [ID:nN16520771]
                                
 Toshiba Corp <6502.T>, the world's No. 2 maker of NAND-type
flash memory, jumped 4.4 percent to 332 yen after a newspaper
said it will likely post a smaller-than-forecast operating loss
for the last business year as flash memory prices stabilised and
the company cut costs. [ID:nT308309]
                                
 Toshiba confirmed the report on the operating loss after the
Tokyo market closed for the midday break.
                                
 Trade was moderate on the Tokyo exchange's first section,
with 1.2 billion shares changing hands, roughly in line with last
week's morning average.
                                
 Advancing stocks outnumbered declining ones by more than 2 to
1.
 (Editing by Edwina Gibbs)