Nikkei rises on strong earnings, but financials drag down Topix

TOKYO (Reuters) - Japan's Nikkei share average rebounded on Thursday as investors flocked to companies posting rosy earnings such as brewer Asahi Group Holdings , but profit-taking in financials limited gains and pulled down the broader Topix index.

Analysts said that investors moved cautiously ahead of a two-day meeting of G20 finance ministers opening Friday due to concern that the yen's recent sharp fall could be criticised at the gathering.

The Nikkei gained 0.5 percent to 11,307.28. That is 1.7 percent below the 33-month high of 11,498.42 hit on February 6.

Companies with strong results and improved outlooks attracted buying. Electronic component maker Taiyo Yuden Co Ltd jumped 16 percent after revising its full-year net profit forecast to 3 billion yen, compared with just breaking even.

In a note to clients, JPMorgan hiked its profit estimates for Taiyo Yuden for the next fiscal year and beyond.

Asahi rose 5.8 percent after the beverage maker posted record sales and net profit for the year ended December 31 and said it would buy back up to 30 billion yen of its shares, or 4.3 percent of all its issued stock.

Japanese chip-related companies Dainippon Screen Manufacturing Co Ltd <7735.T>, Advantest Corp <6857.T> and Tokyo Electron Ltd <8035.T> gained between 3.7 and 7.7 percent after revenue and earnings forecasts from U.S. counterpart Applied Materials Inc were largely ahead of analysts' estimates as smartphones and tablets drive sales.

Falls in financial shares caused the broader Topix to shed 0.2 percent to 954.88.

Mitsubishi UFJ Financial Group dropped 1.9 percent, Mizuho Financial Group <8411.T> skidded 1.9 percent and Sumitomo Mitsui Financial Group <8316.T> slipped 1.2 percent.

With the banking sector subindex rising <.IBNKS.T> 45 percent since mid-November, it is prone to profit-taking, traders said.

On the main board, trading was relatively thin, with 3.66 billion shares changing hands, compared with last week's average daily volume of 4.65 billion shares.

On Thursday, the Bank of Japan kept monetary policy steady as expected.

GROWING MARKET CAP

The Nikkei has gained some 30 percent since mid-November, while the yen has slumped 15 percent against the dollar during the same period as Japan's new government has relentlessly pressure the BOJ for more aggressive policy easing.

Exporters have led the gains on a weakening yen and on optimism about Prime Minister Shinzo Abe's commitment to combat years of deflation and revive growth.

SMBC Nikko Securities said that 70 companies had market capitalization of more than 1 trillion yen as of February 13, compared with 47 in mid-November.

Keiichi Ito, chief quant analyst at SMBC Nikko Securities, sees the Japanese market rising in the middle term after there's clear guidance on how listed companies should fare in the fiscal year to begin April 1.

"If the companies' full-year forecasts will rise by 10 percent on an operating basis, the benchmark could hit around 13,000 by the summer," Ito said.

Market participants said that on top of expectations for global cyclical exporters to rise, shares that depend on domestic demand such as banks will also likely gain momentum.

"I recommend domestic-demand sectors on hopes for the government's reflationary policy. In particular, bank stocks will probably make good investments as their main lending businesses are expected to show growth," said Kyoya Okazawa, head of global equities at BNP Paribas.

(Additional reporting by Sophie Knight and Tomo Uetake; Editing by Richard Borsuk)

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