Nikkei shakes off WorldCom woes

TOKYO, Japan (Reuters) -- Tokyo's key Nikkei average shot up by more than 2 percent by mid-morning on Thursday, bouncing off the previous day's 4 percent dive on rebounds in a wide range of shares including electronics maker Sony Corp.

A slight gain in the tech-heavy U.S. Nasdaq index and a settling of the recently slumping dollar to about 120 yen in Asian trade triggered short-covering in the futures market, traders said, which in turn fuelled buy-backs in stocks.

"I don't think a rebound of this degree should surprise anyone, especially since the Nasdaq ended in positive turf," said Koji Muneoka, head of domestic sales trading at HSBC Securities.

"If pension funds buy in we could see some more upside, but I personally don't think we'll climb much further today."

Sony, the world's largest consumer electronics maker, was up 4.13 percent at 6,050 yen by 0053 GMT, helping the benchmark Nikkei climb 2.18 percent or 219.87 points to 10,294.43.

Sony was the most heavily traded issue by value and had fallen to a four-month nadir the day before.

The capital-weighted Topix index rose 1.47 percent or 14.42 points to 998.70.

One notable winner was Aeon Co Ltd, which put on 3.88 percent to 3,080 yen, although it had given up nearly 5 percent in the market's drubbing on Wednesday.

Safe havens

Aeon, Japan's second-largest retail group, said after the previous session's close that revenues grew by a healthy 5.5 percent over the first quarter of the business year, in which it expects strong profit growth despite tough competition.

Telecoms issues also bounced back after an accounting scandal at U.S. phone company WorldCom Inc prompted heavy selling in them during Wednesday trade.

KDDI Corp, Japan's second-largest communications provider, perked up 4.94 percent to 361,000 yen after sliding 6 percent the day before.

Tokyo Gas Co Ltd, in contrast, shed 0.91 percent to 326 yen.

Defensive shares had been relatively strong performers on Wednesday as investors sought safe havens amid the rout.

Elsewhere, in Seoul the Kospi regained 2.3 percent in early trading after being hammered down more than 7 percent on Wednesday.