* Shionogi jumps on report of new flu drug
* Construction machinery makers strong on Goldman upgrades
By Aiko Hayashi
TOKYO, May 25 (Reuters) - Japan's Nikkei share average rose
1.1 percent on Monday as drugmaker Shionogi <4507.T> jumped after
a report that it has developed a new flu drug, while construction
machinery makers such as Komatsu <6301.T> gained on a brokerage
upgrade that cited robust demand in China.
Daiichi Sankyo <4568.T> advanced 4.1 percent after the
drugmaker said on Sunday that Malvinder Singh, chairman and chief
executive of its Indian unit, Ranbaxy Laboratories <RANB.BO>, had
resigned. []
"Investors are betting the New York market will likely rise
after today's market holiday as it has fallen four days in a
row," said Fumiyuki Nakanishi, a manager at SMBC Friend
Securities.
U.S. markets will be closed on Monday for the Memorial Day
holiday, and British markets will be closed for a bank holiday.
"The (Japanese) government's monthly economic report will be
released later today and if it says the economy has hit bottom,
as some expect, the stock market will be in an upward trend for
about a year as past experiences suggest. That is prompting some
buying as well," Nakanishi continued.
In light trade, the benchmark Nikkei <> added 105.42
points to 9,331.23, after falling 0.4 percent on Friday.
The broader Topix <> gained 0.9 percent to 883.46.
U.S. stocks fell for a fourth day on Friday, with the Dow
Jones industrial average <> down 0.2 percent.
Ratings agency Standard & Poor's rattled markets on Thursday
when it said it might cut Britain's AAA credit rating because of
the danger of soaring public debt, sparking fears of similar
action against the United States.
Takahiko Murai, a general manager at Nozomi Securities said
index-related buying by newly set up funds appeared to be helping
to push the market higher, but that caution remained ahead of
U.S. economic data such as housing sales.
Figures for existing home sales in April will be released on
Wednesday, and new home sales data for the same month comes out
on Thursday.
"U.S. housing data is a focus precisely because the data is
important in gauging the outlook for the economy. If it turns out
to be poor, the market will likely react negatively," Murai said.
Analysts also said investors were watching out for news on
the fate of General Motors <GM.N>.
GM faces a June 1 deadline to work out issues with its
creditors if it wants to avoid a bankruptcy filing. On Friday, a
spokesman for some GM creditors said the company's largest bond
holders, with a total of roughly $27 billion in debt, plan to
reject GM's current offer for a 10 percent equity stake.
[]
SHIONOGI POWERS HIGHER
In Tokyo, shares of Shionogi shot up 5.6 percent to 1,950 yen
after Kyodo News cited industry sources as saying the drugmaker
is expected to market a new influenza drug in Japan, possibly
from next year.
The number of cases of H1N1 flu in Japan has topped 300.
Other drugmakers also gained, with Eisai Co <4523.T> climbing
3 percent to 3,140 yen, while Daiichi Sankyo rose to 1,745 yen.
Shares of Komatsu and Hitachi Construction <6305.T> climbed
after Goldman Sachs upgraded both companies to "buy" from
"neutral", citing strong demand for construction machinery in
China and the likely recovery of demand in developing economies.
Komatsu, which was also put on Goldman's conviction buy list,
rose 2.3 percent to 1,357 yen, while Hitachi Construction added 2
percent to 1,514 yen.
Renown Inc <3606.T> gained 3.7 percent to 141 yen after the
Sunday Times reported it is in talks to sell its upmarket British
fashion brand Aquascutum to China's YGM Trading <0375.HK>
[]
Exporter shares were mixed. Canon Inc <7751.T> rose 1.3
percent to 3,210 yen, while Honda Motor <7267.T> shed 1.3 percent
to 2,675 yen.
Some 968 million shares changed hands on the Tokyo exchange's
first section, below last week's morning average of 1 billion.
Advancing shares outnumbered declining ones by nearly 4 to 1.
(Editing by Joseph Radford)
