* Nikkei adds 1.2 pct, Topix up 1.0 pct
* Nikkei highest since Feb 2011
* Abe's comment in Nikkei seen more committed to economy -
* Steep drop in yen may unnerve some investors - analyst
* TV maker Sharp jumps on additional investment report
By Ayai Tomisawa
TOKYO, Jan 11 Japan's Nikkei share average rose
as much as 1.7 percent to a 23-month high on Friday, with
exporters extending gains on a weaker yen after a newspaper
reported Prime Minister Shinzo Abe as saying the central bank
should consider making the pursuit of maximum employment a part
of its mandate.
The Nikkei added 1.2 percent to 10,781.97 after
rising as high as 1.7 percent to 10,830.43, the highest level
since February 2011.
Exporters led the gains, with Toyota Motor Corp
rising 1.6 percent, Honda Motor Co advancing 1.8
percent, and Nikon Corp adding 2.6 percent.
Abe was quoted by the Nikkei newspaper saying that Japan has
lost competitiveness because of the strong currency and it was
up to both the government and the BOJ to reverse the yen's gains
for the sake of the economy.
"I want the BOJ to feel responsible for the underlying
economy," Abe was quoted in the Nikkei newspaper. "I want the
BOJ to keep maximising employment at the forefront of its
Some analysts said that Abe had gone too far suggesting a
restriction of the central bank's independence. But others said
Abe's comments in the Nikkei reminded the market that the
government can override rejections of bills by the upper house
after winning an overwhelming majority of seats in the lower
house election in December.
"Abe is seen seriously committed to making the economy
better as he is becoming more detailed, and investors are
feeling it is possible under his government," said Kyoya
Okazawa, head of global equities at BNP Paribas. "While most
macro funds have finished allocating Japan shares to their
portfolios by the end of the year, we are getting inquiries from
long-only funds which intend to pick up Japanese stocks on
Friday's gains took the Nikkei deep into "overbought"
territory. Its 14-day relative strength index stood at 78.32,
above the 70-mark which is deemed overbought and often indicates
the market is ripe for a correction in the near term.
"Investors are already aware that the market is overheated.
But even with such caution, they are ready to add more Japanese
shares to their portfolios," said Yutaka Miura, a senior
technical analyst at Mizuho Securities.
But he added that buying could stall if the yen weakens
very quickly, such as hitting 90 yen to the dollar on the day.
The dollar last traded at 89.17 yen, its highest since
"A weak yen is generally positive for Japanese exporters,
but a steep drop from the current level may make them cautious,"
Miura said, adding that investors may also be wary of taking a
large bet before a three-day weekend.
Markets will be closed on Monday in Japan for a public
The yen has been weakening since Abe called on the Bank of
Japan in mid-November to adopt a bolder policy to revitalise the
economy, including setting an inflation target of 2 percent. The
Nikkei has since rallied nearly 25 percent.
Sharp Corp surged 9.6 percent to 321 yen, hitting
a two-week high after the Asahi newspaper said Mizuho Corporate
Bank and Bank of Tokyo-Mitsubishi UFJ are considering providing
additional loans to the struggling TV maker.
Fast Retailing Co rose 3.4 percent after the
operator of casual clothing chain Uniqlo raised its earnings
guidance for the business year ending August, due to strong
sales in its home market.
The broader Topix index gained 1.0 percent to