* Property shares climb on hopes for bank lending expansion
* JAL rises after most retirees agree to pension cuts
* Gains limited by pre-FOMC wariness
By Aiko Hayashi
TOKYO, Dec 16 (Reuters) - Japan's Nikkei average hit its
highest in seven weeks on Wednesday, with bank shares soaring
after a report that global banking regulators are eyeing
effectively delaying the implementation of new capital rules.
Real estate stocks such as Mitsui Fudosan <8801.T> gained on
hopes banks might lend more following the same report by the
Nikkei business daily that the Basel Committee on Banking
Supervision has agreed to establish a transition period of at
least 10 years for new capital rules. []
"If the Nikkei report were true, short-covering in banks
would likely continue for a while. Japanese banks' capital ratios
are lower than those of, say, European and U.S. peers and worries
about equity financing had particularly hurt their shares," said
Soichiro Monji, chief strategist at Daiwa SB Investments.
"But investors are cautious as a whole ahead of the result of
the Fed meeting, with speculation about a sooner-than-expected
rate hike pushing down U.S. stocks yesterday and weighing down on
other Asian stocks."
The benchmark Nikkei <> rose 0.5 percent to 10,133.44,
after earlier rising as high as 10,222.22, its highest since
October 27.
The broader Topix <> was up 1.1 percent at 894.40.
U.S. stocks slipped on Tuesday as investors trimmed positions
ahead of Wednesday's decision on interest rates from the Federal
Reserve, reflecting their reluctance to place big bets before
getting the central bank's latest assessment of both the economy
and monetary policy.
A higher-than-expected increase in the overall U.S. Producer
Price Index in November raised concerns the Fed may find it
difficult to keep benchmark rates at their current level near
zero. [] []
BANKS SOAR
The Basel Committee on Banking Supervision, which is made up
of central banking and regulatory officials from nearly 30
countries, is putting together a package of stricter financial
regulations to prevent another credit crisis.
The committee is expected to publish a draft of its reforms
by the end of January.
Mizuho Financial Group <8411.T>, Japan's second-biggest bank,
vaulted 15.2 percent to 182 yen and No.3 Sumitomo Mitsui
Financial Group <8316.T> surged 13 percent to 2,995 yen.
The expected implementation of new capital rules was behind
Mitsubishi UFJ Financial Group's <8306.T> decision to raise about
1 trillion yen through a new share issue. []
Shares of the top bank rose 3.8 percent to 465 yen.
Analysts have said Japan's two other major banks, Sumitomo
Mitsui Financial Group and Mizuho Financial Group, may have to
follow Mitsubishi UFJ and raise more funds, and worries about
such new issuance have been weighing on the sector and the
market.
The Nikkei report cheered Japanese property stocks, which
were hit as the global economic crisis squeezed financing and
drove investors out of the property market.
Mitsui Fudosan <8801.T> added 1.5 percent to 1,582 yen and
Sumitomo Realty & Development <8830.T> climbed 2.9 percent to
1,761 yen.
Japan Airlines Corp <9205.T> rose 3 percent to 103 yen after
saying on Tuesday that most of its retirees were willing to
accept proposed cuts to pension payouts, a key step needed to
secure approval for reducing its pension burden, which is a
prerequisite for receiving a government bailout. []
(Editing by Joseph Radford)
