* Nikkei rises 1.8 pct, looks set to break two-day slide
* Car, electronics firms gain on hopes for stimulus benefit
* Eco-friendly promotion plan boosts wide range of shares
* Strong machinery orders providing additional support
* Growing foreign buying also a plus
By Elaine Lies
TOKYO, April 9 (Reuters) - Japan's Nikkei average rose 1.8
percent on Thursday as Sony Corp <6758.T> and other electronics
firms took heart from an economic stimulus plan likely to promote
the use of eco-friendly home appliances.
Automakers and solar power-related firms gained after a draft
of the ruling Liberal Democratic Party stimulus plan showed it
will feature bigger than expected spending of 15.4 trillion yen
($154 billion) and contain measures to encourage the use of solar
panels and fuel-efficient cars. []
An additional boost came from stronger than expected
machinery orders, a volatile figure seen as a leading indicator
of corporate spending. []
Analysts said the market was responding mainly to details of
the economic plan, such as subsidies for fuel-efficient cars,
rather than the total proposed amount of spending, which is 3.1
percent of GDP.
"The numbers themselves are largely factored in and not
having that much of an impact, but it's the concrete details that
really matter," said Masayoshi Okamoto, head of dealing at Jujiya
Securities.
"Things like emphasis on eco-cars will help boost the shares
of companies affected. But the market has factored in large
amounts of money."
In still more good news for the Nikkei, foreign investors --
one of the key drivers of the Japanese market -- were net buyers
of equities last week to the tune of 44.7 billion yen ($448
million), finance ministry data showed.
Hopes that the economic plan would lead to increased consumer
spending dovetailed with sentiment from the United States, where
Wall Street gained on hopes that a recovery in business spending
will boost tech profits, while other U.S. indices gained after
Bed Bath & Beyond <BBY.O> reported better-than-expected profits,
hinting at a revival in consumer spending.
In a sign of improving sentiment, the CBOE Volatility Index
<.VIX> -- the so-called "fear index" -- closed at its lowest
level since early January.
"If there is the kind of proposed subsidy we're hearing
about, this could have quite an impact on consumer buying and is
inviting a positive response from investors," said Hiroaki
Osakabe, a fund manager at Chibagin Asset Management.
The benchmark Nikkei <> gained 158.38 points to 8,753.39
by the end of morning trade, on track to snap a two-day fall. The
broader Topix <> rose 1.6 percent to 827.67.
STIMULATED BY HOPE
Among steps in the draft stimulus plan was one to help
promote digital TV, giving Sony shares an additional boost that
helped them climb 4.6 percent to 2,405 yen.
Other big gainers were Panasonic Corp <6752.T>, which rose
2.2 percent to 1,253 yen and Toshiba Corp <6502.T>, climbing 2.7
percent to 306 yen. Hitachi Ltd <6501.T> rose 4.1 percent to 308
yen.
Canon Inc <7751.T> was the largest contributor to the Nikkei
225 by volume weight, rising 4.4 percent to 3,060 yen. It was
followed by Toyota Motor Corp <7203.T>, up 1.9 percent at 3,820
yen, and Honda Motor Co <7267.T>, up 0.9 percent at 2,775 yen.
Some analysts said sentiment was also favourable for
electronics firms and other big exporters because of a sense
that, with inventories thinned, they were now more flexible.
"Now that these companies, especially car firms, have slimmed
down their inventories they seem to be ready to respond to
anything," said Jujiya's Okamoto.
Machinery orders rose 1.4 percent in February from the
previous month, compared with a median market forecast for a 6.7
percent fall.
Analysts cheered the news but some remained wary.
"The figure may be boosted by one-off orders for railway
trains. I think orders are still on a downtrend," said Junko
Nishioka, chief economist at RBS Securities. "But it's also true
that the decline is slowing."
Komatsu Ltd <6301.T>, the world's second-largest maker of
earth-moving equipment, gained 4.6 percent to 1,219 yen, while
Kubota <6326.T> rose 2.5 percent to 579 yen. Hitachi Construction
<6305.T> rose 3.1 percent to 1,318 yen.
Trade slowed on the Tokyo exchange's first section, with 951
million shares changing hands, compared with last week's morning
average of 1.1 billion.
Advancing shares outpaced declining ones by nearly 4 to 1.
(Editing by Michael Watson)
