Nikkei up 2.4 pct, banks surge as U.S. fears ease

                                
 * Nikkei extends gains, banks surge as U.S. fears ease
                                
 * Possible BOJ debt buying plan adds support for banks
                                
 * Pioneer soars on car gear tie-up report
                                
 * Exporters gain on weaker yen, trade moderate
                                
 By Elaine Lies
                                
 TOKYO, March 16 (Reuters) - Japan's Nikkei stock average rose
2.4 percent on Monday as banks such as Sumitomo Mitsui Financial
Group <8316.T> surged amid easing fears over the health of U.S.
lenders, while exporters rose on a slightly weaker yen.
                                
 Pioneer Corp <6773.T> shares soared 16 percent after the
Nikkei business daily said the restructuring electronics maker
was in talks with Mitsubishi Electric <6503.T> and other firms on
a possible tie-up in car navigation and other auto equipment
operations. [ID:nT226870]
Bank shares got added support after the Nikkei business daily
said the central bank was considering buying subordinated debt
issued by banks to help bolster their capital, though market
analysts said U.S. news was still the key factor. [ID:nT129734]
"There's now more and more of a sense that U.S. banks may be
in good shape, though we'll have to wait and see until their
earnings start coming out next month," said Masayoshi Okamoto,
head of dealing at Jujiya Securities.
                                
 "But while banks may be getting better, there's still a
potential time-bomb out there called GM, and a lot of uncertainty
over that," he added.
                                
 The benchmark Nikkei <.N225> rose 184.83 points to 7,754.11,
adding to its 5.2 percent leap on Friday -- the biggest one-day
percentage gain in more than three months. The broader Topix
<.TOPX> rose 3 percent to 745.78.
 The banking subindex surged 5.8 percent, becoming the biggest
gainer among the subindexes, though analysts said this was mainly
due to the brighter picture for U.S. financials.
                                
 "It seems as if overall worry about the U.S. financial sector
is fading, and it's with that backdrop that this potential new
BOJ policy has emerged," said Noritsugu Hirakawa, a strategist at
Okasan Securities.
                                
 "The main factor behind the bank share rise is what has gone
on in the United States."
                                
 The S&P marked its third-best week since World War II last
week, helped by comments from Citigroup's <C.N> Chairman Richard
Parsons to Reuters late on Thursday that the bank did not need
any more government aid, sending its stock up more than 6
percent. [ID:nN12399663]
An index of U.S. bank stocks <.BKX> rose 37 percent last week
after several top bank executives suggested the industry was
stabilising.
                                
 BANKS LEAD THE WAY
                                
 Building on gains made last week, Sumitomo Mitsui Financial
Group surged 7.7 percent to 3,070 yen. Mizuho Financial Group
<8411.T> climbed 6.2 percent to 190 yen. Mitsubishi UFJ Financial
Group <8306.T> surged 6.7 percent to 447 yen.
                                
 Pioneer shares climbed to 109 yen, despite Mitsubishi
Electric saying on Monday it was not in talks with Pioneer on car
navigation or other auto equipment operations. Still, Mitsubishi
Electric stock climbed 5.8 percent to 400 yen.
 Exporters gained as the yen weakened against the dollar, with
the U.S. currency up roughly 0.3 percent to 98.33 yen. <JPY=>
                                
 Canon Inc <7751.T> rose 5.5 percent to 2,610 yen, becoming
the second-biggest contributor to the Nikkei 225 by volume
weight. Sony Corp <6758.T. rose 2.1 percent to 1,932 yen and
Panasonic Corp <6752.T> rose 3.5 percent to 1,093 yen.
                                
 Oil-linked shares fell as crude oil prices slumped 4 percent
to $44 a barrel on Monday after OPEC kept output steady <CLc1>
[O/R]
                                
 Oil and gas field developer Inpex <1605.T> shed 3.6 percent
to 651,000 yen and major distributor Showa Shell Sekiyu <5002.T>
slipped 2.1 percent to 839 yen. Nippon Oil <5001.T> fell 1.7
percent to 452 yen.
                                
 Shares of JGC <1963.T>, a Japanese plant engineering firm,
tumbled 7.3 percent to 1,123 yen after Kuwait's prime minister
said in remarks published on Sunday that the government would
cancel a $15 billion oil refinery project at its weekly meeting
on Monday. [ID:nLF720565]
                                
 The stock was the top drag on the Nikkei 225.
                                
 Trade was moderate on the Tokyo exchange's first section,
with 1 billion shares changing hands, in line with last week's
morning average.
                                
 Advancing stocks outpaced declining ones by 9 to 1.
 (Reporting by Elaine Lies; Editing by Hugh Lawson)