Japan shares rise on Toyota's bullish outlook

TOKYO:  Japanese shares gained 0.22 percent on Wednesday helped by Toyota Motor's strong earnings outlook, although gains were pared back as China's rate hike hit Shanghai shares, brokers said.The headline Nikkei index rose 23.03 points to 10,659.01 at the Tokyo Stock Exchange by the lunch break, after hitting 10,701.92, its highest point since May, during the morning.The Topix index of all first section shares grew 0.37 percent, or 3.52 points, to 947.52.

The market was heartened by a series of positive corporate earnings, including from troubled automaker Toyota, as well as strong performances across US and European stock markets, brokers said.Toyota shares soared 4.58 percent to 3,650 yen by lunch on upbeat earnings and after a US probe found electronic systems were not to blame for acceleration issues that prompted millions of recalls.

On Tuesday the automaker said its net profit for the nine months to December nearly quadrupled, and hiked its profit outlook for the year.Toyota shares rose as high as 3,665 yen, their highest level since late April.But the Nikkei trimmed gains to temporarily slip into negative territory as the Shanghai Composite Index opened lower after Tuesday evening's rate hike.

China's central bank raised interest rates for the third time in four months, as authorities ramp up efforts to tame inflation and avert social unrest."Since it is unclear how many more times China will need to raise interest rates, it seems overly optimistic to completely ignore the move" as having no immediate impact on China's growth, Masatoshi Sato, a senior strategist at Mizuho Investors Securities, told Dow Jones Newswires.

He expected the Nikkei average to move between 10,600 and 10,700 in the afternoon. Tokyo Electric Power rose 1.65 percent to 2,089 yen thanks to a ratings upgrade by Mitsubishi UFJ Morgan Stanley Securities. Among China-sensitive shares, construction machinery maker Komatsu fell 0.47 percent to 2,528 yen and Hitachi Construction Machinery was down 0.88 percent at 2,022 yen.