Nikkei stays firm, up 1.7 percent

NEC contined to make ground in Tokyo trading Tuesday

TOKYO, Japan -- Tokyo stocks held onto early gains Tuesday, ending the morning session with the benchmark Nikkei 225 index more than 1.7 percent higher.

Technology issues led by Sony Corp rebounded, while the yen's deterioration against major currencies helped support exporters.

Consumer electronics giant Sony put on 300 yen or 5.15 percent to reach 6,130 yen by midday, paring a 17.5 percent nosedive in the past two trading days.

The Nikkei ended the morning up 198.96 points or 1.72 percent at 11,778.23, while the broader TOPIX index gained 11.55 points or 0.99 percent at 1,180.06.

Other regional markets also stronger

Other markets in the region were also firmer in morning trade, with Australia, Korea, Hong Kong and New Zealand all ending the session up.

In Taiwan, where a devastating typhoon claimed at least 35 lives Monday, the Taiex opened weaker, but then recovered to be up 16.54 points to 4333.13 at midday.

In Japan, comments on Monday afternoon by Prime Minister Junichiro Koizumi on a draft schedule of his pledged reforms also helped support the market after Monday's finish at a fresh 16-year low.

"Comments by Mr Koizumi yesterday, coupled with a weak yen and rebound in Sony are giving a cue to investors to buy," said Kazunori Jinnai, general manager at Daiwa Securities SMBC's equity department.

NEC extends gains

Electronics group NEC Corp extended Monday's 2.03 percent gain and rose 5.77 percent to 1,650 yen despite reporting late on Friday that its group operating profit for the June quarter fell more than 70 percent from a year earlier.

"I think the mood is changing. Investors are now focusing more on the good parts of NEC's earnings results," said Muneyuki Tsuji, fund manager at Japan Investment Trust Management.

Japan's largest office machine maker Canon Inc soared 5 percent to 4,250 yen and Honda Motor Co, Japan's number three automaker which benefits from a weak yen, gained 2 percent to 5,680.

Canon and Honda are due to announce quarterly earnings later on Tuesday.

Banking giant Mizuho Holdings was up 2,000 yen at 470,000 yen on news GE Capital will acquire U.S. commercial finance firm Heller Financial for $5.3 billion.

Fuji Bank Ltd, one the three banks being merged into the Mizuho Holdings group, owns 52 percent of Heller and controls about 77 percent of Heller's voting power.

On Monday, the Nikkei fell for a third straight day, losing 1.85 percent to a 16-year closing low of 11,579.27 after touching 11,539.16.

That is just above a four-month intraday low of 11,531.68 marked on July 23 and a near a 16-year intraday low of 11,433.88 marked in March.

Japan's jobs data released early Tuesday showed the unemployment rate unchanged at a record 4.9 percent in June on a seasonally adjusted basis, underscoring grim labor conditions in an economy on the brink of recession.

Reuters contributed to this report.