(Adds stocks, details)
By Aiko Hayashi
TOKYO, Jan 31 (Reuters) - Japanese stocks rose on Thursday,
rebounding from earlier losses when top bank Mitsubishi UFJ
Financial Group (MUFG) <8306.T> and other financials pushed down
the market after fears about a possible downgrade of bond
insurers hit U.S. financial shares.
Investors started picking up shares when the Nikkei average
neared 13,000 out of supply and demand needs, though not on any
particular positive news, said Shinji Igarashi, an equity manager
in the sales department at Chuo Securities.
NTT Data Corp <9613.T>, Japan's biggest systems integrator,
jumped nearly 6 percent to help buoy the overall market after it
posted a 3.9 percent rise in operating profit on demand from
domestic banks, and said it was on track to achieve its full-year
outlook.
"The U.S. market reacted more to negative news as a
half-percentage-point (Federal Reserve) rate cut had been already
factored in," said Naoki Koga, senior fund manager at Toyota
Asset Management.
"But as the Fed will likely keep lowering rates in the
future, investors may soon see that as positive and that will be
good for the market."
Remarks by a CNBC reporter that the two biggest bond insurers
may lose their top credit rating came in the last hour of U.S.
trading, sending major indexes into negative territory after they
had gained earlier on the Federal Reserve's expected
50-basis-point rate cut. []
The Dow Jones industrial average <> ended Wednesday down
0.3 percent.
The benchmark Nikkei average <> ended Thursday's morning
session up 0.6 percent or 72.95 points at 13,417.98, after a 1
percent fall on Wednesday.
The broader TOPIX index <> added 0.7 percent or 8.77
points to 1,328.88.
Japanese banks faced additional downward pressure due to
media reports about expanding subprime-related losses at Japanese
banks, including a Nikkei report that MUFG's subprime-linked
losses may grow to some 90 billion yen ($850 million)for the
year ending in March.
BANK WOES
NTT Data jumped 5.7 percent to 467,000 yen.
Deutsche Securities analyst Ko Kijima raised his rating to
"hold" from "sell" on the stock, but lowered his target price to
450,000 yen from 491,000 yen.
Shares of MUFG, which is scheduled to announce its
third-quarter results later in the day, fell 0.6 percent to 1,023
yen while No. 2 Mizuho Financial Group <8411.T>, also due to
report on Thursday, shed 1.6 percent to 487,000 yen.
Sumitomo Mitsui Financial Group <8316.T>, Japan's
third-biggest banking group, declined 2.1 percent to 830,000 yen.
Nomura Holdings Inc <8604.T>, Japan's biggest brokerage, was
down 1.1 percent at 1,589 yen.
Investors had also sold banks on Wednesday after reports
that Mizuho might inject an additional $1.9 billion into its unit
Mizuho Securities to shore up the struggling brokerage, which has
been hit hard by subprime losses.
Elsewhere, Canon Inc <7751.T> dropped 4.5 percent to 4,480
yen after the digital camera and office equipment maker posted a
surprise decline in quarterly operating profit on Wednesday, hit
by a slowdown in the U.S. economy. []
Trade was moderate on the Tokyo exchange's first section,
with 1 billion shares changing hands, in line with last week's
morning average.
Advancers outpaced decliners by a ratio of more than three to
one.
(Reporting by Aiko Hayashi)
