Nikkei breaks through 9,000 ahead of Fed stimulus decision

US-MARKETS-JAPAN-STOCKS:Nikkei breaks through 9,000 ahead of Fed stimulus decision

By Sophie Knight

TOKYO (Reuters) - Japan's Nikkei share average broke through 9,000 for the first time in two weeks on Thursday morning on heightened expectation of fresh stimulus from the U.S. Federal Reserve, with big gains for shippers and Apple suppliers buoying the market.

Investors shielded themselves from the risk of a stronger yen -- the anticipated effect of further Fed easing -- by buying up stocks of companies with little exposure to overseas markets, such as social networking site Gree Inc <3632.T>.

Gree rose 4.9 percent and was the second most-traded stock on the main board, behind rival DeNA Co Ltd <2432.T>, which was up 4.6 percent.

The Nikkei <.N225> put on 0.5 percent to 9001.39, climbing above its 200-day moving average at 8,998.67.

"I think that there's a slow-motion crystallization of a sort of latent optimism," said Stefan Worrall, director of equity cash sales at Credit Suisse in Tokyo. "The events at least look more encouraging."

Investors' hopes for progress in reducing punishingly high borrowing rates for highly indebted euro zone nations were answered after Germany's highest court gave the go-ahead for the country to ratify the European Stability Mechanism, while Dutch voters came out in favor of a pro-euro party.

"Germany did what everyone expected, but now all eyes are on the Fed," said Hirokazu Fujiki, manager of investment strategy at Okasan Securities. "Even if they decide to purchase more bonds, no one knows the potential scale or content of those purchases, which is creating a lot of uncertainty."

Expectations of a third round of "quantitative easing" via bond purchases were raised by last Friday's disappointing U.S. jobs data. Fed Chairman Ben Bernanke framed employment concerns as a justification for further stimulus in a speech last month.

More quantitative easing by the Fed is expected to boost sentiment in global markets, but there are also fears it will further weaken the dollar against the yen, which hit a 3-1/2-month high against the greenback on Tuesday, hurting exporters.

The broader Topix <.TOPX> rose 0.4 percent to 744.88.

SHIPPERS AFLOAT AGAIN

Shippers saw massive gains, with the index <.ISHIP.T> up 6.2 percent after losing 7.3 percent last week as prices for iron ore struck a three-year low.

"The shippers sold off on the idea that the bulk commodities -- iron ore, coal and so on -- were hitting new lows, while these gains seems to be a delayed reaction to those prices picking up after China's news last Friday," said Credit Suisse's Worrall, referring to China's approval of 60 infrastructure projects worth more than $150 billion.

Parts suppliers to Apple Inc <AAPL.O> were in demand after the U.S. company unveiled a new iPhone, with Meiko Electronic Co Ltd <6787.OS> jumping 17.1 percent and Foster Electric Co Ltd <6794.T>, Sumida Corp <6817.T> and Murata Manufacturing Co Ltd <6981.OS> gaining between 2.1 and 5.2 percent.

TDK Corp <6762.T>, which surged 6.6 percent on Wednesday on a brokerage report, rose another 3.4 percent. SMBC Nikko Securities said TDK was undervalued as worries about demand for its hard disk drives were unwarranted, and production could ramp up next year when PC replacements should reach a peak.

Elsewhere, Itochu Corp <8001.T> slightly outperformed the market by putting on 0.9 percent after Dole Food Company Inc <DOLE.N> said it was in advanced talks to sell the Japanese trading company its packaged foods and Asia fresh businesses for around $1.7 billion.

(Additional reporting by Dominic Lau; Editing by Richard Borsuk)

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