Nikkei ends up 2.1 pct

But it remains one of the worst performing major world stock markets this year,hurt by worries about the impact of the yen8217;s strength on corporate earnings and the fragile economic recovery.

8220;With the Nikkei average above its 25-day moving average,it seems investors were ready for short-covering,8221; said Kenichi Hirano,operating officer at Tachibana Securities.

8220;That said,the only major upward catalyst for stocks these days is short-covering,and when that runs its course,it8217;s hard to expect more gains.8221;

The benchmark Nikkei rose 187.19 points to 9,301.32,above its 25-day moving average of 9,229,with some market participants citing buying by domestic investors and short-covering of futures by foreigners.

The 25-day moving average is considered a proxy for a one-month moving average and is closely watched in Japan.

The Nikkei8217;s next target is seen at around 9,460,where the bottom of its Ichimoku cloud lies,while support lies at 9,049,its tenkan sen,an indicator of short-term trends. Ichimoku charts are popular with Japanese traders.

The Nikkei8217;s MACD is headed upwards after a bullish cross,suggesting upward momentum and a possible short-term rebound,though its slow stochastic is edging closer to overbought territory.

The broader Topix rose 1.8 per cent to 838.71.

US stocks added more than 1 per cent on Friday. US payrolls fell for a third straight month in August,the Labor Department said,but the loss of 54,000 non-farm jobs was far less than the 100,000 expected by economists polled by Reuters,and private hiring surprised on the upside.

But while risk appetite rose on the payrolls report,Tokyo market players said weak data on national services from the Institute for Supply Management was weighing on investor confidence.

In Asia trade,the dollar was trading at 84.37 yen. The dollar hit a 15-year low of 83.58 yen on electronic trading platform EBS late last month on fears the US economic recovery was stalling.

8220;The jobs data was better than expected but it8217;s not as if it improved drastically. And as a result,there hasn8217;t been a reversal in the yen8217;s strength,8221; said Masayuki Otani,chief market analyst at Securities Japan,Inc.

8220;Worries about the strong yen are the biggest reason why the benchmark is finding it difficult to go higher. Market players remain on alert as they don8217;t know what would happen if dollar/yen trades at the 83 yen level again.8221;

Despite a recent recovery,the Nikkei is still down about 12 per cent this year,compared with the MSCI index of Asia Pacific stocks outside Japan which is almost flat,although the Nikkei is outperforming a 18 per cent drop in Chinese stocks.

The Bank of Japan8217;s two-day rate review that ends on Tuesday is a focus in the market this week.

8220;The central bank will likely keep the status quo as worries about the US economy have receded,but the BOJ governor8217;s briefing afterwards is a major focus,8221; said Hiroichi Nishi,general manager of equity marketing at Nikko Cordial Securities.

EXPORTERS BUOY

Shares of exporters that are particularly sensitive to the health of the global economy led gains.

Kyocera Corp jumped 3.9 per cent to 7,770 yen and TDK Corp climbed 3.1 per cent to 4,785 yen. Tokyo Electron Ltd was up 3.9 per cent at 4,160 yen.

Elpida Memory surged 9.5 per cent to 1,039 yen after Mitsubishi UFJ Morgan Stanley Securities began coverage of the PC memory maker with a 8220;18221; rating,a recommendation to buy the stock.

Senior analyst Masahiko Ishino said Elpida would likely benefit from strong mobile DRAM demand for smartphones and a public offering of shares in Taiwanese subsidiary Rexchip Electronics Corp expected in the coming years.

Mazda Motor Corp rose 3.7 per cent to 194 yen after the Nikkei business daily reported at the weekend the automaker was taking emergency cost-cutting steps to soften the impact of the rising yen on its profit target for this year.

Some 1.49 billion shares changed hands on the Tokyo exchange8217;s first section,near a two-week low hit last week. Advancing shares outnumbered declining ones by more than 12 to 1.