(Adds stocks, details)
By Elaine Lies
TOKYO, Jan 24 (Reuters) - Japan's Nikkei average rose 1.4
percent on Thursday after Wall Street rebounded on optimism that
a rescue for U.S. bond insurers may be in the offing, with
proposals to support the Tokyo stock market also giving a boost.
Exporters such as Canon Inc <7751.T> surged, while battered
property shares were snapped up by investors seeking bargains.
Banks gained on strength in their U.S. peers.
Shares briefly rose over 2 percent after sentiment was buoyed
by news that members of Japan's ruling Liberal Democratic Party
are debating emergency steps to help the stock market, including
tax exemptions on dividend income and capital gains.
A draft of the proposals included a call for the Bank of
Japan to cut interest rates back to zero and return to
quantitative easing, in which the banking system is flooded with
excess cash. It also said the government should consider
establishing a sovereign wealth fund.
Market participants were sceptical.
"If they could carry out these proposals it would be
incredible, but I don't think anybody in the market believes they
really will. After all, they'd lose a lot of tax money and how
would they keep the government going then?" said Masayoshi
Okamoto, head of dealing at Jujiya Securities.
"This is positive not for its content but for the message it
sends, that the government and Bank of Japan are ready to do
something aggressive," said Okamoto.
Nearly all of the Nikkei's gains were based on short-covering
in the wake of Wall Street's rebound, players said.
The Dow Jones industrial average <> surged nearly 300
points on optimism that a government plan to rescue ailing bond
insurers is taking shape and could prevent more huge credit
losses, while confidence is growing that aggressive interest rate
cuts by the Federal Reserve could help stabilise the economy.
"Wall Street was a roller coaster yesterday, but the chance
of support for bond insurers is quite positive, since it shows
authorities may respond faster than to the subprime mortgage
crisis," said Takashi Ushio, head of the investment strategy
division at Marusan Securities.
The benchmark Nikkei was up 1.4 percent at midsession at
13,013.92 after earlier rising as high as 13,134.77, a gain of
more than 2 percent.
The broader TOPIX index <> was up 1.9 percent at
1,273.89 after earlier also surging above 2 percent.
PROPERTY POSITIVE
Property-related shares, which have been sharply sold this
month, surged on buying by investors attracted by their valuation
as well as technicals suggesting a rebound.
Mitsui Fudosan Co Ltd <8801.T>, Japan's largest real estate
developer, rose 9.1 percent to 2,225 yen.
Mitsubishi Estate Co Ltd <8802.T>, the second-largest
property firm, gained 7.3 percent to 2,500 yen and Tokyu Land
Corp <8815.T> was up 7.6 percent at 803 yen.
Banks surged on a positive performance by their U.S. peers,
with industry leader Mitsubishi UFJ Financial Group <8306.T>
jumping 5.4 percent to 945 yen and No.2 Mizuho Financial Group
<8411.T> climbing 3.7 percent to 453,000 yen and Sumitomo Mitsui
Financial Group <8316.T> up 3.9 percent at 766,000 yen.
Exporters also forged higher.
Canon was up 3.7 percent at 4,500 yen and Toyota Motor Corp
<7203.T> was up 1.8 percent at 5,190 yen.
Trade was moderate on the Tokyo exchange's first section,
with 1.09 billion shares changing hands compared with last week's
morning average of 1.14 billion.
Advancing shares beat declining ones by a ratio of nearly
eight to one.
(Editing by Michael Watson)
