* Nikkei hits highest level since Oct 8
* Shippers, trading houses, resource shares up on China hopes
* Konica Minolta surges on brokerage upgrade
* Eyes on GM, automakers edge down
By Elaine Lies
TOKYO, June 1 (Reuters) - Japan's Nikkei average edged up 0.8
percent after hitting a nearly eight-month high on Monday as
shippers including Kawasaki Kisen <9107.T> and trading houses
such as Sojitz <2768.T> rose on hopes for an economic recovery in
China.
Data showing China's manufacturing sector continued to expand
for the third month in a row added to tentative signs the world's
third-largest economy is stabilising. []
Konica Minolta <4902.T> jumped nearly 9 percent to 1,080 yen
after Goldman Sachs raised its rating on the office equipment
maker to "Buy" from "Neutral".
Just after the morning session ended, a U.S. official said
General Motors <GM.N> will file for bankruptcy protection on
Monday. Nikkei futures traded in Singapore <0#SSI:> edged
slightly higher. []
"The filing will basically eliminate one potentially bad
factor and stocks could rise, though of course the longer-term
impact is harder to gauge and may have to be watched," said
Yutaka Miura, a senior technical analyst at Mizuho Securities.
"There's some expectation that U.S. shares could rise, and
this is underpinning the Nikkei."
Automakers slipped by the end of morning trade, with Honda
Motor Corp <7267.T> down 1.5 percent and Toyota Motor Corp
<7203.T> losing 1.1 percent.
But positive sentiment was spreading in the market news that
after U.S. consumer confidence rose in May to its highest in
eight months, and after the Nikkei posted a third successive
month of gains in May, the first such streak since April-June
2007.
"We're seeing a lot of shares up today on expectations for
China's recovery as well, and while this is still of course just
expectations, it's buoying all the so-called China plays: metals,
shippers, trading houses and individual shares such as Komatsu,"
said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ
Securities.
"The situation with GM also seems to be pretty well cleaned
up, and this will remove a major source of uncertainty."
Others disagreed, however, noting that the benchmark Nikkei's
sustained move above its 200-day moving average -- which now
comes in a bit above 9,300 -- should have set the stage for sharp
gains, but that inevitable worry about GM was keeping gains
capped.
The benchmark Nikkei <> rose 75.08 points to 9,597.58 by
the end of the morning after earlier rising as far as 9,626.13,
its highest since Oct 8. The broader Topix <> rose 1 percent
to 906.41.
CHINA CHEER
While China's official May purchasing managers' index (PMI)
lost some momentum, falling to 53.1 from 53.5 in April, it was
the third straight month it stood above 50. A reading above 50
indicates an expansion of activity in the manufacturing sector,
while a reading below suggests contraction.
Shippers were boosted by this and by a rise in the Baltic
Exchange's main sea freight index <.BADI> to an eight-month high
on Friday on Chinese demand for goods.
The index, which gauges the cost of shipping resources
including iron ore, cement, grain, coal and fertiliser, rose 5.94
percent on Friday and has set 2009 records for 12 straight
sessions. []
Kawasaki Kisen surged 7.7 percent to 464 yen, Nippon Yusen
<9101.T> rose 4.4 percent to 476 yen and Mitsui O.S.K. lines
<9104.T> climbed 4.3 percent to 705 yen.
The shipping sub-index <.ISHIP.T> gained 5 percent to become
the biggest gainer among the sub-indexes.
Resource-related firms surged on China demand as well as
rising prices. Shanghai copper gained 3.2 percent.
Mitsui Mining and Smelting <5706.T> surged 6.3 percent to 238
yen and Dowa Holdings <5714.T> powered up 7.6 percent to 456 yen.
Sumitomo Metal Mining <5713.T> rose 6.1 percent to 1,430 yen.
Trading house Marubeni Corp <8002.T> rose 5.3 percent to 454
yen and fellow trader Sojitz gained 5.8 percent to 201 yen.
Trade was active on the Tokyo exchange's first section, with
1.1 billion shares traded compared to last week's morning average
of 1 billion.
Advancers outnumbered decliners by more than 2 to 1.
(Reporting by Elaine Lies; Editing by Joseph Radford)
