Japan Nikkei ends week positive, exporters up on yen

By Elaine Lies

TOKYO (Reuters) - Japan's Nikkei average rose 0.3 percent on Friday, reversing earlier losses, with exporters such as Canon Inc (7751.T: Quote, Profile, Research, Stock Buzz) gaining as the dollar edged up against the yen to hold near a seven-month high hit this week. Toyota Motor Co (7203.T: Quote, Profile, Research, Stock Buzz) extended gains after the world's biggest automaker kept its forecasts unchanged despite posting a 28 percent drop in quarterly net profit on a strong yen and slumping U.S. sales. The benchmark Nikkei .N225 gained 0.6 percent for the week after ending lower the previous week.

But market players were wary given the overall economic outlook after the Japanese government cut its view on the economy on Thursday, dropping the word "recovery" in a monthly report for the first time in nearly five years as raw material costs and a global slowdown push the world's No.2 economy towards a recession.

"Japan's economy is powered by exports, so of course it's inevitable that the U.S. economic slowdown would have an impact eventually," said Tadahiko Murai, general manager of equities at Nozomi Securities.

Others said relief at having made it through the Japanese earnings season, with the bulk of results now out, helped boost stocks on Friday and would likely keep the market well supported over the next few weeks.

"We're basically in a box and the downside's growing more and more solid around 13,000, with the market just moving volatilely rather than on any trends," said Tomomi Yamashita, fund manager at Shinkin Asset Management.

"Next week is likely to be quiet until (Japanese) GDP figures on August 13, with worries about poor figures in a tug-of-war with expectations of a possible government economic stimulus plan."

The Nikkei gained 43.42 points to 13,168.41, reversing a morning of falls as short-covering sparked by a firmer dollar emerged. The broader Topix rose 0.1 percent to 1,259.93.

The dollar was fetching around 109.56 yen after earlier rising as high as 109.78 yen. A weaker yen helps Japanese exporters by making their goods more competitive overseas and bolstering profits when they are repatriated.  Continued...