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Nikkei hits 3-1/2 week high on Fed hopes; Softbank extends sharp rally

Ayai Tomisawa
Tuesday, 22 Oct 2013 | 9:56 PM ET

* Dollar's weakness versus yen limits broader market gains

* Nidec rises on strong profit forecast

* Softbank hits new 13-year high on efforts to bolster growth - analyst

TOKYO, Oct 23 (Reuters) - Japan's Nikkei share average edged up to a 3-1/2 week high on Wednesday morning after a soft U.S. jobs report cemented expectations the Federal Reserve will keep its stimulus in place until early next year. The Nikkei gained 0.3 percent to 14,753.47 in mid-morning trade after rising as high as 14,799.28, the highest since Sept 27. The Topix added 0.3 percent to 1,217.62. Softbank Corp extended its recent gains, jumping 3.0 percent to a new 13-year high of 7,850 yen and was the most traded stock by turnover. "The stock has been popular these days..investors are taking heart in its aggressive efforts to bolster growth," said an analyst at a Japanese brokerage house. Softbank, which has gained 150 percent so far this year, last week said it had agreed to pay $1.26 billion for a 57 percent stake in privately held cellphone distributor Brightstar Corp as it looks to boost its bargaining power with handset makers. The broader market took its lead from a strong session on Wall Street after data showed U.S. employers added 148,000 workers last month, well below the 180,000 economists had expected. The data was seen as supporting the Fed's decision to maintain its $85 billion in monthly bond purchases, which has been a major factor in the S&P 500's 2013 rally of 23 percent.

But the dollar remained under pressure at 98.14 yen, preventing investors from aggressively chasing the market higher. Bellwether exporters were mixed, with Toyota Motor Corp rising 0.2 percent, Honda Motor Co falling 0.6 percent and Sony Corp dropping 0.4 percent. "It's hard to chase exporters higher now because the dollar is under pressure," said Tsuyoshi Nomaguchi, a strategist at Daiwa Securities. "But with the second-quarter earnings season just around the corner, some of them will gain ground on likely higher profit forecasts this fiscal year." A stronger yen dents Japanese exporters' competitiveness overseas and reduces their dollar earnings when repatriated. Fuji Heavy Industries Ltd gained as much as 1.8 percent after the Nikkei reported that the company plans to double the production capacity of Subaru cars in the United States to cater to growing demand for the sport utility vehicle there. Nidec Corp rose 3.8 percent to 9,090 yen after saying that its operating profit for the year ending March 2014 will likely jump 355 percent on year to 80 billion yen, up from previously forecast 75 billion yen thanks to solid sales of automobile parts. But CLSA said its stock price is expensive as it is trading over 20 times its estimated earnings and over 2.5 times its book value. The brokerage has a 'Sell' rating on the stock.

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