Tokyo moves ahead on bullish U.S. news

Japanese consumer electronics companies are doing well with devices such as this portable navigation system

TOKYO, Japan -- Tokyo stocks firmed by midday on Wednesday as bullish news from U.S. tech companies eased worries about earnings of their Japanese counterparts.

Banks also were higher, extending the previous day's rebound.

The benchmark Nikkei average ended the morning up 83.96 points or 0.64 percent at 13,265.96, while the capital-weighted TOPIX index rose 7.77 points or 0.59 percent to 1,315.32.

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Elsewhere in the region, Taiwan was up more than 130 points to 5204 and Hong Kong moved ahead strongly, led by Legend Computer on news of its talks with AOL.

In Sydney the benchmark S&P/ASX200 hit a record high of 3442.0 mid-morning before easing back after midday.

Factors bearing on the market were the Reserve Bank leaving interest rates unchanged and the release of GDP figures which showed the Australian economy grew 1.1 percent in the March quarter.

Korea's stock market was closed Wednesday for the Memorial Day holiday.

Asian markets take cue from U.S. moves

Asian markets took their cue from news that U.S. telecom equipment maker Lucent Technologies Inc expects third-quarter sales to be modestly higher than its second-quarter results, and a jump in shares of chip maker Xilinx's on a slowing in order cancellations and delays.

Following a 3.61 percent gain in the tech-heavy Nasdaq market, top chipmaker Toshiba Corp put on 2.10 percent to 681 yen, while chip and computer maker NEC Corp rose 1.17 percent to 1,902 yen.

But market players said the upbeat news failed to wipe out worries over Japanese corporate earnings.

"Tokyo moved higher but it was not a powerful advance at all. Apparently, concerns over a potential deterioration in corporate earnings are still there, and not fully factored into the market yet," said Masatoshi Sato, senior strategist at Mizuho Investors Securities.

Banking sector puts on strong spurt

In the banking sector, Mizuho Holdings Inc, the world's largest banking group by assets, climbed five percent to 630,000 yen, extending Tuesday's 1.35 percent gain. UFJ Holdings Inc was up 4.22 percent at 667,000 yen.

With concerns over massive problem loans held by the nation's major lenders remaining intact, gains in banking shares may prove to be a temporary rise based on short-covering rather than the beginning of a sustainable recovery, traders said.

Besides banks' bad loans, a dearth of concrete policy steps from the Prime Minister Junichiro Koizumi's government was also putting a cap on the market's topside, market players said.

"Shares had moved higher on expectations of sweeping reforms by Koizumi. But we still cannot have a clear idea about what his policies will look like," said Hidenori Karaki, equities general manager at Tokyo Mitsubishi Personal Securities.

KDDI Corp jumped 7.28 percent to 604,000 yen as investors cheered its plans to tap China's vast market through a broad tie-up with China Unicom Ltd.

Number three carrier Japan Telecom Co Ltd fared even better, surging 9.20 percent to 2.73 million yen.

Japan Telecom last month changed its rules to allow for a buyback of 319,500 shares on August 20, the same day that its shares will be split 5-for-1 for every shareholder as of July 10.

Reuters contributed to this report.