October 31, 2018 / 2:48 AM / 9 months ago

Nikkei bounces as chip sector tracks U.S. gains

* Advantest, Sony, Honda attract buying after earnings

* Nintendo falls on weaker-than-expected profit

By Ayai Tomisawa

TOKYO, Oct 31 (Reuters) - Japan’s Nikkei bounced to a one-week high on Thursday as chip-related stocks surged in line with their U.S. counterparts, while attention remained on first-half earnings results from the likes of Sony and Nintendo.

The Nikkei share average gained 1.6 percent to 21,810.47 in midmorning trade, the highest level since Oct. 24.

Chip equipment makers jumped, after the Philadelphia SE Semiconductor index surged 4.2 percent overnight and helped U.S. chip shares outperform.

Tokyo Electron rallied 2.7 percent and Advantest Corp, which raised its full-year operating profit forecast by 45 percent to 53 billion yen, jumped 20 percent.

Sony Corp surged 7 percent after the company boosted its annual profit outlook by 30 percent to a record level after a strong second-quarter, propelled by popular game titles like “Marvel’s Spider-Man” as well as growing demand for its online gaming services.

Analysts said investors are taking heart from strong forecasts from Japanese manufacturers, easing worries about a hit to earnings from the heated U.S.-China trade dispute.

“The market is relieved that companies seem to take those worries in their stride for now,” said Isao Kubo, an equity strategist at Nissay Asset Management.

But he added that there is still big uncertainty hanging over companies’ future growth while there are signs that China’s demand is falling.

Wednesday’s gainers included Honda Motor Co, which jumped 5 percent after it raised its annual operating profit forecast by 11.3 percent to 790 billion yen ($7.0 billion) for the year ending in March 2019 thanks to a weak yen and strong sales of its motorcycles.

Meanwhile, Nintendo Co defied the broader rally, dropping more than 3 percent after it disappointed the market with a profit that undershot market expectations.

Nintendo’s operating profit for the July-Sept period jumped 30 percent to 30.9 billion yen thanks to strong Switch hardware and games sales, posting the highest quarterly profit since the second quarter of the year ending March 2011. But it fell shy of the 36.6 billion yen average of estimates of seven analysts, according to Refinitiv data.

The broader Topix rose 1.4 percent to 1,633.88. (Editing by Sam Holmes)

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