* Nikkei rises 1.8 pct, Topix up 1.9 pct * Japan stocks fwd P/E falls to level not seen since BOJ action * SoftBank gains after Dish says abandons Sprint bid * TEPCO sinks, says finds highly toxic strontium in Fukushima groundwater By Dominic Lau TOKYO, June 19 Japan's Nikkei average hit a one-week high on Wednesday, with traders citing the launch of a near $780 million investment trust as a driving factor, while SoftBank Corp rose as it looked likely to win the battle for Sprint Nextel. The Nikkei ended 1.8 percent higher at 13,245.22 points, its highest since June 12 and closing above the bottom of the Ichimoku cloud in a bullish sign. SoftBank, which is trying to take control of Sprint , was the top-weighted gainer in the Nikkei, up 4.2 percent after U.S. Dish Network Corp said it would not make a new offer to buy Sprint. "There is a trust set up today with 74.2 billion yen ($776 million) accumulated ... buying Topix 100 excluding financials," a senior trader at a foreign bank said, explaining the stronger market. The Topix 100 rose 2 percent. The trust is being launched by Daiwa. Banks were also in demand after their recent battering, with Sumitomo Mitsui Financial Group up 5.2 percent and Mitsubishi UFJ Financial Group adding 2.4 percent. The broader Topix index gained 1.9 percent to 1,106.57, with 2.81 billion shares changing hands, up from a near six-month low of 2.43 billion shares hit on Tuesday but sharply below this year's daily average of 3.88 billion. Tokyo Electric Power Co, which was the most traded stock on the main board by turnover, sagged 3.9 percent after the utility said high levels of toxic strontium-90 have been found in groundwater at the Fukushima nuclear power plant, which was crippled by the March 2011 earthquake and tsunami. Investors are looking to the U.S. Federal Reserve to clarify the outlook on its massive stimulus when it ends a two-day policy meeting later in the day. Global markets have been roiled since Fed Chairman Ben Bernanke suggested last month that the stimulus could be reduced in coming months if the economy continued to recover. The Nikkei has lost 17 percent since hitting a 5-1/2 year peak on May 23 on concerns over Fed stimulus as well as slowing growth in China, Japan's second-largest export market, and disappointment over Prime Minister Shinzo Abe's growth strategy to revive the economy. It entered a bear market last week after dropping more than 20 percent from that multi-year high. With the recent sell-off, fund managers' appetite for Japanese equities have cooled somewhat. A monthly survey of asset managers by Bank of America Merrill Lynch showed investors' net overweight of Japanese stocks eased to 17 percent from 31 percent in May. "ATTRACTIVE AGAIN" Societe Generale, however, said the Nikkei was "attractive again" after the 20 percent correction. "Neighbouring markets like Korea, China or Taiwan should suffer as attractiveness relative to Japan has diminished," it said. Although some unloading of long Nikkei positions by hedge funds occurred in April and May, overall their net long positions have kept up at high levels, SG's Arthur van Slooten said. Japanese equities' 12-month forward price-to-earnings ratio fell from a three-year high of 16.3 reached three weeks ago to 13.6, a level not seen since early April, when the Bank of Japan unveiled sweeping stimulus measures to spur growth, according to Thomson Reuters Datastream. The benchmark Nikkei is still up 7 percent since April 4, and has risen 27 percent so far this year. "Japan appears to be benefiting more strongly and quickly than expected from the government and central bank's monetary and fiscal stimulus," ABN AMRO Private Banking wrote in a report. "We focus on sectors and stocks with low valuations and restored profitability. This includes the auto industry, as it rolls out next-generation car models and benefits from contributions from key export markets."
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