* Nikkei breaks 10,800 for 1st time since May
* Foreigners broaden buying beyond exporters - analyst
* Nikkei could approach 12,000 in next few mths -analyst
By Antoni Slodkowski and Ayai Tomisawa
TOKYO, Feb 16 (Reuters) - Japan's Nikkei stock average
climbed to a nine-month high above 10,800 on Wednesday helped by
a softer yen, with the benchmark's strong run encouraging foreign
investors to broaden their buying to financial shares.
It was a third straight day of gains for the Nikkei, which
has climbed some 18 percent since November when foreigners began
snapping up lagging Tokyo stocks, with recent momentum coming
from a big shift in market focus to developed economies from
emerging ones.
The gains were underscored by high volume with the day's
total set to come in above last week's daily average of 2.2
billion shares. The Tokyo stock exchange's first section has seen
more than 2.0 billion shares change hands for seven consecutive
sessions.
"A weaker yen doesn't only mean 'buying exporters' anymore,
it actually means 'buying Japan' and that's why we're not only
seeing strong inflows into core blue-chips, but also lagging
domestic-demand stocks," said Masayoshi Okamoto, head of dealing
at Jujiya Securities.
"Looking at trading volumes in banking, securities or
property sectors we can see a clear pattern of systematic,
sector-wide buying of these shares from foreign investors that
has at last emerged."
The dollar climbed against the yen to its highest in eight
weeks on Tuesday, boosted by the recent rise in U.S. Treasury
yields, with more gains seen likely if bond markets continue to
factor in inflation.
By mid afternoon, the Nikkei average was up 0.5 percent, or
56.91 points at 10,803.57, after hitting an intraday high of
10,842.31, its highest level since May 6, 2010.
Immediate resistance now lies at the May 6 intraday high of
10,847.90, traders said.
The broader Topix <> rose 0.6 percent to 968.16.
FINANCIALS ADVANCE
The Topix banking sub-index <.IBNKS.T> added 1.2 percent,
while the index of other financials <.IFINS.T>, which includes
consumer lenders, gained 3.1 percent.
The banking sector, which has gained 26 percent since
November, is still considered undervalued as its price-to-book
ratio stands around 0.7, underperforming the average PBR of 1.2
for the Nikkei 225 components, according to Thomson Reuters data.
A share is seen as undervalued if the PBR is below 1.0.
Analysts also pointed at higher dividend yields for banks,
now at 2.9 percent, and well above the average for the Nikkei 225
components of 1.7 percent.
Kenichi Hirano, operating officer at Tachibana Securities,
said the Nikkei could approach 12,000 over the next few months.
"Despite signs of economic recovery in the U.S., the Federal
Reserve is still hamstrung by some market factors in tightening
monetary policy, so a very positive situation for stocks with the
global economy picking up speed and excess liquidity will
probably continue until March or April."
Strong October-December corporate earnings and worries over
inflation in emerging markets will continue to support Tokyo
stocks, he said.
The Nikkei, having added almost 6 percent this year, is the
best performing Asian market so far in 2011, while Asian stocks
outside Japan <.MIAPJ0000PUS> are down 2.3 percent on the year to
date, largely due inflationary worries and anticipated further
interest rate hikes in countries like China.
Reflecting this, Japan-focused funds posted returns of 1.26
percent in January, outperforming a 0.06 percent rise globally
and making Japan the best performing hedge fund region in the
world, said Singapore-based fund tracker Eurekahedge.
[]
The dollar climbed to an eight-week high of 83.93 yen
<JPY=EBS> on Tuesday and was trading a tad below that on
Wednesday.
Among exporters, Tokyo Electron <8035.T> rose 1.8 percent to
5,640 yen and Advantest Corp <6857.T> added 2.9 percent to 1,773
yen.
(Editing by Edwina Gibbs)
