Nikkei up 0.8 pct as soft yen buoys exporters

                                
 (Adds detail, stocks)
                                
 By Aiko Hayashi
                                
 TOKYO, May 30 (Reuters) - The Nikkei stock average rose 0.8
percent on Friday, with exporters such as Canon Inc <7751.T>
finding favour on a softer yen and a rise in U.S. stocks on
receding inflation and recession fears.
                                
 Nippon Paper Group Inc <3893.T> jumped 4.5 percent after the
Asahi daily reported that it and Rengo Co <3941.T> were
considering integrating their managements to create Japan's
biggest paper maker, though the firms denied the report.
[ID:nT243191]
                                
 "The biggest factor for the rise is the softer yen, with
bonds being almost flat, while another supporting factor is
expectations for gains in U.S. stocks tonight after Dell's
earnings," said Yutaka Miura, deputy manager of the equity
information department at Shinko Securities.
                                
 Dell Inc <DELL.O>, the No. 2 personal computer maker,
reported earnings after the closing bell that beat Wall Street's
expectations. [ID:nN29371124]
                                
 The benchmark Nikkei average <.N225> added 115.88 points to
finish the morning session at 14,240.35 after hitting its highest
since May 19. It rose 3 percent on Thursday.
                                
 The broader Topix index <.TOPX> climbed 1.1 percent to
1,396.07.
                                
 Japanese annual inflation dipped to 0.9 percent in April from
a year earlier, below expectations, while industrial output fell
0.3 percent in April from a month earlier, matching the median
market forecast, data showed before the market opened.
                                
 "The economic data before the open were within expectations,
but indicated a slowdown trend in the economy," Miura said.
                                
 The dollar rose 0.1 percent from late Thursday U.S. trade to
105.62 yen <JPY=>, hovering near a three-month high struck on
Thursday.
                                
 Katsuhiko Kodama, senior strategist at Toyo Securities, said
hedge funds seem to be structuring their positions on the view
that stocks are resilient in the face of inflation.
                                
 "Japanese stocks are unexpectedly rising as those investors
expect a shift from bonds to stocks," he said.
                                
 EXPORTERS GAIN
                                
 Canon gained 2.5 percent to 5,680 yen and Toyota Motor Corp
<7203.T> added 2.1 percent to 5,300 yen. Investors had fretted
over a stronger yen as it dents exporters' overseas profits when
they are brought back home.
                                
 Nippon Paper jumped 4.5 percent to 305,000 yen, while Rengo
was flat at 719 yen.
                                
 Financial shares advanced after their U.S. peers rose, buoyed
by MasterCard <MA.N>, which lifted its long-term profit outlook.
[ID:nN29172502]
                                
 Japan's top lender Mitsubishi UFJ Financial Group <8306.T>
jumped 4.2 percent to 1,052 yen, No.2 lender Mizuho Financial
Group <8411.T> climbed 1.5 percent to 546,000 yen and
third-ranked Sumitomo Mitsui Financial Group <8316.T> gained 3.3
percent to 896,000 yen.
                                
 Aderans Holdings Co Ltd <8170.T> surged 10.2 percent to 2,225
yen, adding to the previous day's 8.8 percent rise, after U.S.
hedge fund Steel Partners helped oust the president and most of
the board of the wig maker, the first time management at a
Japanese firm has been ejected under pressure from an activist
fund. [ID:nT203406]
                                
 Trade was moderate on the Tokyo exchange's first section,
with 947 million shares changing hands, compared with last week's
morning average of 1.1 billion.
                                
 Advancing shares outnumbered fallers by more than 2 to 1.
 (Editing by Hugh Lawson)