*Nikkei up 1.7 percent, at highest level in over a week
*Exporters gain as yen weakens, inflation concerns ease
*Banks climb on short-covering amid overall market rise
(Adds stocks and comments)
By Aiko Hayashi
TOKYO, Aug 11 (Reuters) - The Nikkei average rose 1.7
percent on Monday, boosted by Honda Motor Co <7267.T> and other
exporters on a softer yen and easing worries about inflation and
corporate profits after a recent fall in oil prices.
Japan's top three banks gained on short-covering amid
improving investor confidence in the market.
"A softer yen and receding inflation worries, which helped
retailers and manufacturers overseas, are pushing up stocks
here," said Takahiko Murai, general manager of equities at
Nozomi Securities.
"But the yen has gotten a bit stronger in early Tokyo time
and that may limit further gains."
The benchmark Nikkei <> added 225.96 points to end the
morning session at 13,394.37, hitting its highest point since
July 31.
The broader Topix <> gained 1.3 percent to 1,276.24.
A reported comment by a top ruling party official backing a
dividend tax exemption also helped improve market sentiment,
said Katsuhiko Kodama, senior strategist at Toyo Securities.
Taro Aso, secretary general of the Liberal Democratic Party,
proposed an expansion of tax incentives on stock investments,
including an exemption on dividend income up to 3 million yen
($27,190), Jiji news agency said on Saturday. []
The dollar traded at around 109.78 yen <JPY=>, after having
earlier hit its highest for the year at 110.36 yen. Investors
welcome a softer yen as it helps boost exporters' overseas
profits when they are brought back home.
EXPORTERS, BANKS GAIN
Shares of Honda jumped 4.9 percent to 3,640 yen to become
the top positive contributor to the Nikkei 225.
Canon Inc <7751.T> climbed 3.1 percent to 5,270 yen and Sony
Corp <6758.T> gained 2.8 percent to 4,380 yen.
Toyota Motor Corp <7203.T> advanced 3.5 percent to 5,000
yen. The Nikkei business daily reported on Monday that the
world's biggest carmaker is set to raise prices of hybrid cars
and commercial vehicles by 1-3 percent in Japan as costs for
steel and other materials soar. []
Top lender Mitsubishi UFJ Financial Group <8306.T> gained
2.8 percent to 869 yen and No.2 Mizuho Financial Group <8411.T>
rose 1.3 percent to 474,000 yen. Sumitomo Mitsui Financial Group
<8316.T>, Japan's third-biggest bank, added 0.6 percent to
706,000 yen.
But Nozomi Securities' Murai warned that their gains may not
last as Japan's slowing economy hurts profitability.
"Their recent earnings results have shown net profits at
their core businesses declined as the economy is getting
worse... Bad loans from mid- to small-sized companies are on the
rise," he said.
Shares of Hitachi Zosen Corp <7004.T> soared 11.2 percent to
119 yen.
The machinery and engineering firm said its operating profit
jumped 3.7 times to 1.8 billion yen for the three months ended
in June, buoyed by strong sales growth in ship engines and
pressure containers for oil refineries.
Trade was light on the Tokyo exchange's first section, with
851 million shares exchanging hands, compared to last week's
morning average of 1 billion.
Advancing stocks outpaced decliners by a ratio of about 2 to
1.
(Reporting by Aiko Hayashi; Editing by Edwina Gibbs)
