Nikkei, Asia Markets Close Higher Friday on Smooth Europe Debt Auctions

(Reuters) - Japan's Nikkei share average climbed to a one-week high on Friday, rising above the key threshold of its 25-moving average after smooth European debt auctions prompted buying of exporters, while the market remained on edge ahead of U.S. corporate earnings.

Exporters with exposure to Europe were in demand as the euro gained against the yen after successful Italian and Spanish debt sales eased investor concern of an immediate credit crunch.

Canon rose 3.1 percent and Konica Minolta Holdings gained 1.7 percent.

The market is temporarily rebounding but the fundamental problems in the euro zone still remain. Nobody knows how long the euro will continue to climb against the yen, said Yutaka Miura, a senior technical analyst at Mizuho Securities.

The Nikkei average rose 1.4 percent to 8,500.02, closing above its 25-day moving average near 8,475, while the broader Topix advanced 1.1 percent to 734.60.

The euro climbed to 98.68 against the yen, off an 11-year low hit recently.

Trading volume on Tokyo's main board rose to 1.69 billion shares, up from 1.39 billion the previous day, due to
settlement of January options contracts in a so-called SQ special quotation. The Osaka Securities Exchange said after the close that Nikkei options were settled at 8,470.71.

Honda Motor Co was the biggest gainer on Tokyo's core 30 list, which closed at a four month high. The firm gained 3.4 percent to 2,553 yen on a legal victory for its U.S. unit after an appeals court threw out a nationwide lawsuit over a brake system used in some of its vehicles.

Rival automakers also outperformed the market, with Toyota Motor Co gaining 1.6 percent and Nissan Motor Co up 2.5 percent on the euro's gains.

Japan's top oil and gas explorer Inpex Corp added 1.2 percent after it gave the go-ahead for the $34 billion Ichthys liquefied natural gas export project in Australia, in which it has a 73 percent stake.

Among engineering firms involved in the project, JGC Corp climbed 3.9 percent and Chiyoda Corp gained 3.1 percent.

SHIFT IN FOCUS
Market participants said that their immediate focus had shifted from the debt turmoil in Europe to U.S. corporate earnings.

Masayuki Otani, chief market analyst at Securities Japan, said investors would like to see the extent of Europe's impact on U.S. banks when they report earnings, starting with JPMorgan Chase & Co on Friday.

U.S. retail sales were weaker in December but it is expected that the recovery will be patchy and there is no denying that the economy is on track for a recovery, he said.

Strategists said results of technology companies including Intel next week would also be a gauge of U.S. firms' ability to weather Europe's debt storm.

The Nikkei is lagging behind global markets in a sense that investors are unwilling to step in as there are no particular factors to prompt buying, said Ryota Sakagami, chief strategist of equity research at SMBC Nikko Securities.

In this environment, the U.S. earnings may provide some sense of clarity on the euro zone's impact.

Nomura recommended that investors pick up trading companies and financials as they offer high beta, meaning they tend to outperform the wider market in good times though underperform in bad times. It said they have high dividend yields and low risk of dividend cuts ahead of the end of the financial year on March 31.

Meanwhile, selective buying in commodities-related shares on the back of high oil prices helped lift some southeast Asian stock markets on Friday.

Positive comments on Europe's outlook, and stabilisation in European bond markets, also provided support as the region gained on the week, led by a 5.2 percent rise in Vietnam.

Strong demand at Spanish and Italian debt auctions helped to offset lacklustre economic data from the United States, where retail sales rose in December at their weakest pace in seven months.

The European Central Bank left interest rates unchanged on Thursday and did not offer to take further action to tackle the euro zone debt crisis, citing tentative signs of a stabilising economy.

Singapore's Straits Times Index climbed 1.8 percent, Jakarta's Composite Index edged up 0.7 percent and Vietnam's Ho Chi Minh Stock Exchange index rose 1.8 percent.

Stocks in Malaysia, Thailand and the Philippines erased early gains to finish down 0.2 percent, 0.71 percent, and 0.74 percent respectively.

The Philippines' main index had set a record high on Wednesday and Thursday amid foreign fund inflows.

Philippine Long Distance Telephone Co dropped 1.4 percent, extending its losses for a second session, partly due to profit taking, brokers said. It had gained 6 percent in three sessions ending Wednesday.

Investors selectively bought regional shares but remained cautious as the global outlook was uncertain, brokers said.

Singapore's Golden Agri Resources Ltd rose 2.78 percent after a combined 2.7 percent drop in the previous two sessions, and Indonesia's PT Bumi Resources Tbk rose 2 percent.

I think there's no significant positive or negative news and funds globally still hold a lot of cash, said Viwat Techapoonphol, senior strategist at broker Tisco Securities.

Asian shares rose to a one-month high on Friday. MSCI's broadest index of Asia-Pacific shares, excluding Japan, rising 0.8 percent by 1005 GMT.

In Bangkok, banking stocks eased 0.4 percent, partly due to the prospect of weak fourth-quarter results. Commercial banks will report quarterly results by next week.

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