Weaker Yen seems to shoot up Nikkei

Japan's Nikkei average rose 1.6 percent on Friday, with exporters such as Canon Inc buoyed by a weaker Yen and optimism over the U.S. economy after surprisingly strong figures on jobs and retail sales.

A jump in oil prices boosted natural resource stocks such as oil and gas field developer Inpex Holdings Inc and trading house Mitsubishi Corp.

"With the dollar around 106 Yen, there will be growing expectations for an upward revision of the earnings outlook, as companies set their forecast based on an average exchange rate of 100 Yen to the dollar," said Hiroichi Nishi, general manager of equity marketing at Nikko Cordial Securities.

"Since the beginning of this month, top financial officials in the United States and Europe have made comments that have provided support to Japanese shares," said Masayoshi Okamoto, head of dealing at Jujiya Securities.

Remarks by Federal Reserve Chairman Ben Bernanke earlier this week helped lift the dollar against the yen, one of the biggest driving factors for export-oriented Japanese stocks.

Bernanke said rising long-term inflation expectations were a "significant concern" for policy-makers and made a rare warning about the inflationary threat from a weak U.S. currency.

With worries about the credit crisis receding, the Nikkei has gained about 23 percent from this year's low touched on March 17.

"The market has been lifted simply by foreign investors buying back shares they had sold," said Masaru Hamasaki, a senior strategist at Toyota Asset Management.

Foreign investors bought a net 1.13 trillion yen ($10.67 billion) of Japanese stocks in May, their highest monthly buying since June 2007, Tokyo Stock Exchange data showed on Thursday.

"Whether the market goes up further depends on Japanese corporate earnings. Are companies really going to post a fall in earnings for this business year?" Hamasaki said.

The dollar slipped from Thursday's three-month high of 106.42 Yen to 105.94 Yen.

Nikkei futures traded in Chicago closed at 14,575, which was 225 points above their close in Osaka.

The Nikkei is likely to trade between 14,400 and 14,700, market participants said.