*Nikkei up 3.6 pct after gain of 5 pct in previous week *Nikkei still down 20 pct so far this month
*Panasonic, steelmakers jump on upbeat earnings prospects
*Soft yen pushes up exporters (Adds comments, stocks)
By Aiko Hayashi
TOKYO, Oct 20 (Reuters) - The Nikkei average climbed 3.6 percent on Monday as a softer yen and upbeat earnings reports about electronics maker Panasonic (6752.T: Quote, Profile, Research, Stock Buzz) and steelmakers helped buoy battered shares in exporters.
Panasonic soared nearly 9 percent after the Nikkei business daily said the firm was likely to beat its profit forecast. Nippon Steel (5401.T: Quote, Profile, Research, Stock Buzz) and JFE Holdings (5411.T: Quote, Profile, Research, Stock Buzz) also jumped after the paper said they were likely to raise their annual earnings outlooks due to lower costs and price hikes. [ID:nT279037] [ID:nT293153]
"Coupled with receding fears over the financial crisis for the time being, the news about Nippon Steel and Panasonic helped spread a sense of relief in the Japanese market," said Katsuhiko Kodama, a senior strategist at Toyo Securities.
"The market will likely raise its floor for the Nikkei little by little after the recent extreme sell-off."
Analysts said a softer yen helped push up the market, but gains were mostly due to short-covering.
"The firm dollar is leading investors to pick up cyclical stocks that were sold off last week," said Takahiko Murai, general manager of equities at Nozomi Securities.
"But the gains probably won't last. The deterioration of the real economy is happening much faster than expected. We need comprehensive counter-measures, rather than just those only for the financial system."
The Nikkei average .N225 added 311.77 points to 9,005.59, after ending the previous week up 5 percent. Still, it has lost 20 percent so far this month.
The broader Topix gained 3.7 percent to 927.37.
The dollar rose 0.3 at 101.95 yen
Japanese stocks also tracked gains in U.S. stock futures SPc1, which rose more than 2 percent, pointing to a higher opening in the U.S. market.
Technical indicators now show Japanese stocks have been oversold, with the dividend yield on the Nikkei at 2.5 percent, about a full percentage point above the 10-year government bond yield and the price to book value at 1.01, but that alone will probably not prompt active buying, market analysts said.
"In a normal economic situation, this would be a time to buy if you were just looking at the price to book value figure," said Mitsushige Akino, chief fund manager at Ichiyoshi Management.
"But market sentiment has already worsened to a level that investors are unable to decide their trading based on valuations. It is an abnormal situation."
PANASONIC JUMPS, EXPORTERS GAIN
Shares of Panasonic jumped 8.9 percent to 1,633 yen after the Nikkei business daily reported that the electronics maker, which had predicted a drop in operating profit for the first half, is now seen beating its forecast by more than 20 billion yen ($197 million).
Panasonic said in a statement that the report was not something the company had officially announced, and it will report its first half results on Oct. 28.
Nippon Steel added 4.4 percent to 330 yen and JFE Holdings gained 9.2 percent to 2,430 yen.
The weaker yen helped exporters climb, with Toyota Motor Corp (7203.T: Quote, Profile, Research, Stock Buzz) rising 5.6 percent to 3,610 yen and Sony Corp (6758.T: Quote, Profile, Research, Stock Buzz) jumping 7.6 percent to 2,625 yen.
But defensive stocks such as drugmakers continued to be popular amid worries about the global economy. Takeda Pharmaceutical Co (4502.T: Quote, Profile, Research, Stock Buzz) climbed 3.3 percent to 4,640 yen and Astellas Pharma (4503.T: Quote, Profile, Research, Stock Buzz) surged 7 percent to 4,130 yen.
"That defensive stocks are up means no one is buying proactively. We are not seeing buying other than short-covering," said Yutaka Miura, a senior technical analyst at Shinko Securities.
Trade was light on the Tokyo exchange's first section, with 2.2 billion shares changing hands, below last week's daily average of 2.4 billion.
Advancing stocks outpaced declining ones by nearly 6 to 1. (Additional reporting by Kaori Kaneko; Editing by Edwina Gibbs)
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