Nikkei hits two week-high in subdued trade

By Tomo Uetake TOKYO (Reuters) - Japanese shares climbed to a two-week high on Monday morning, led by gains in nonbank lenders on a media report the government is considering easing rules in the industry, though trading activity was thin due to the Easter. The benchmark Nikkei gained 0.6 percent to 14,607.98 by the midday break, after rising as high as 14,649.50, a level last visited on April 8. Still, the index is down more than 10 percent since the start of this year, hurt by concerns over the impact of a national sales tax hike, disappointment the central bank won't offer fresh near term stimulus and slowing growth in China. Non-bank lender shares surged on a report in the Nikkei business daily that Japan's ruling party is considering raising the ceiling on interest rates they charge on borrowers, reversing tighter regulations introduced in 2010. Acom Co Ltd soared 11.3 percent while Aplus Financial Co Ltd jumped 19.6 percent. Credit Saison Co Ltd > advanced 5.6 percent at one point to become the second biggest gainer in the Nikkei average. Banks that hold investments in the non-bank financial sector also benefited, with Shinsei Bank Ltd rising 4.5 percent to become the top performer in the Nikkei. Among the biggest banks, Sumitomo Mitsui Financial Group Inc gained 1.2 percent at one point. Exporters were among the gainers as the yen slipped to a 2 1/2-week low of 102.71 yen to the dollar, with Mazda Motor Corp rising 2.4 percent and Mitsubishi Motors Corp up 3.5 percent. The yen took a knock after data showed Japan's export growth slowed sharply in March compared to a year earlier due to weaker shipments to China. Overall, trading was thin across blue-chip stocks, with many foreign investors out for the Easter holiday in their respective markets. "There has been no new order placed by overseas investors. Their activity level has been very low," Shun Maruyama, chief Japan equity strategist at BNP Paribas. Analysts believe a decent earnings season could provide a catalyst to buy Japanese shares, adding they present attractive entry levels. The Japanese corporate earnings season will kick off later in the day, with industrial robot maker Yaskawa Electric Corp announcing its results after the closing bell. "Global portfolios remain underweight Japan after selling a net three trillion yen worth stocks in the January-March period this year," said Masatoshi Kikuchi, pan-Asian chief equity strategist at Mizuho Securities. "It is clear that underperformance or low valuations of Japanese equities alone are not sufficient to persuade overseas investors to buy Japan. They need to be convinced by fundamentals." Foreign investors bought a net 13 trillion yen in 2013, helping the benchmark Nikkei become one of the best performers in the world. The broader Topix advanced 0.4 percent to 1,178.17 in subdued trade, with trading volume at 37.2 percent of full daily average for the past 90 days by the midday break. The new JPX-Nikkei Index 400 added 0.4 percent to 10,718.05. (Editing by Shri Navaratnam)