Nikkei edges up on Toyota, resource stocks

Japan's Nikkei stock average clawed up 0.3% on Wednesday as gains in resource shares on strong metals prices offset falls in exporters after the yen rose to a more than two-month high against the dollar.

Toyota Motor Corp gained 3% on short-covering after a drop in its February US sales of nearly 9% was better than had been expected given the company's massive recall and the ensuing fallout.

But trade was lacklustre, with investors sidelined ahead of key US jobs data due out on Friday as they searched for clues about the strength of the US economic recovery in the wake of a string of mixed indicators.

"Fundamentally things still aren't that good, with spending and jobs still not recovering that much even though manufacturing isn't doing that poorly," said Hiroaki Osakabe, a fund manager at Chibagin Asset Management.

"The recovery will take time. People were a bit too optimistic in January, especially regarding Japanese stocks."

The private ADP National Employment report for February is due out on Wednesday and expected to show that US payrolls shed 20,000 jobs last month after losing 22,000 jobs in January, according to a median estimate from economists polled by Reuters.

But some analysts said a bigger fall in jobs is expected due to major snowstorms in the polling week.

The benchmark Nikkei rose 31.99 points to 10,253.83, while the broader Topix rose 0.3% to 905.53.

The dollar fell to its lowest in more than two months against the yen on Wednesday as investors cut long positions versus other currencies. Investors fret about a stronger yen because it eats into exporter profits when repatriated.

The dollar fell as far as 88.47 yen on trading platform EBS, the lowest since mid-December, before recovering to 88.67 yen , down 0.2%.

Toyota rose 3% to 3,415 yen even though its February US sales fell and documents examined by congressional investigators showed that the company's top US executive warned in 2006 that the quality of the company's vehicles was slipping.

"There'd been predictions of two-figure sales falls due to the recalls, so what we've seen today was short-covering on relief about that as well as the Congressional hearings being over," said Takashi Ushio, head of the investment strategy division at Marusan Securities.

Toyota officials, including president Akio Toyoda, have testified before congressional committees last week and this week.

"But I think we'll have to see the March sales figures as well before we can really relax," added Ushio.

Astellas Pharma Inc fell 1.1% to 3,240 yen after it sued OSI Pharmaceuticals Inc to prevent the US biotech company from using a poison pill or other defence to block its $3.5 billion hostile takeover attempt.