* Exporters up on hopes their earnings will improve on yen drop * Credit Suisse upgrades Japan on short-term * Nikkei on track to log gains for 10th straight week By Ayai Tomisawa TOKYO, Jan 18 Japan's Nikkei share average rose more than 2 percent on Friday as exporters gained on expectations that the central bank will ease monetary policy aggressively next week, putting more downward pressure on the yen. The Nikkei rose 2.1 percent to 10,831.26 points in mid-morning trade. If it ends above Tuesday's 10,879.08, it will be the highest close in 32 months. The index is on track to log gains for the tenth straight week, its longest winning run since 1987. Citing sources familiar with the central bank's thinking, Reuters reported on Thursday that the BoJ next week will consider removing the 0.1 percent floor on short-term interest rates and commit to open-ended asset buying until the 2 percent inflation target is reached. Exporters led the gains, with Toyota Motor Corp adding 2.0 percent, Honda Motor Co gaining 3.6 percent and Panasonic Corp advancing 3.2 percent. "There still is strong expectations on 'Abenomics'," said Hiroichi Nishi, assistant general manager of equity information department at SMBC Nikko Securities. The Nikkei has rallied about 25 percent over the past two months, when Prime Minister Shinzo Abe started calling for further policy easing, causing the yen to weaken. Nishi added that the market is increasingly encouraged by the prospect of exporters' earnings growing at a better pace in the coming years. Credit Suisse upgraded Japan to 5 percent overweight on a short-term basis from the benchmark level, with a year-end target of 12,000 on the Nikkei. "Fiscal and monetary policy are increasingly proactive: the BoJ's balance sheet is set to expand in 2013 by more than those of other central banks, even before the potential change in the BoJ inflation target (up to 2 percent)," analysts wrote in a report. On Thursday, the yen fell to a more than 2-1/2-year low of 90.14 yen to the dollar. The yen last traded at 89.84 yen to the dollar. A weak yen lifts exporters' overseas earnings when repatriated. "Foreign investors are becoming increasingly eager to add more Japanese stocks," said Tetsuro Ii, the chief executive of Commons Asset Management. "Abe has been successful in lifting investor sentiment. A good result must be delivered, and we still don't know about that, but the fact that he boosted investors' risk appetites is very positive." The central bank's policy meeting is scheduled on Jan. 21-22. Topix added 1.8 percent to 906.50.
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