Nikkei hits highest close in week

The Nikkei average booked its highest close in a week on Friday, climbing 1.15 percent as exporters such as Toyota Motor Corp gained on a dip in the yen and after the Federal Reserve kept interest rates unchanged in the key US market.
Shares of Doutor Coffee Co Ltd, Japan's largest coffee chain, slid after its shareholders backed a merger with Nippon Restaurant System Inc, rebuffing opposition by a hedge fund.
After hitting a 4-1/2-year low earlier this month, the yen's decline had been stalled this week as investors worried about the outlook for the subprime mortgage market in the United States.
But that concern waned after the Fed said it sees moderate economic growth over the coming quarters, and left interest rates unchanged. "With the currency at its current level, you can't stay away from exporters," Hiroyuki Nakai, chief strategist at Tokai Tokyo Securities.
"Companies have forecast an exchange rate of 115 yen or 120 yen to the dollar so there are expectations of profit upgrades." The Nikkei finished up 206.09 points at 18,138.36. For the April-June quarter, the benchmark posted a rise of 4.92 percent.
For the six months to June, the Nikkei rose 5.30 percent, looking likely to underperform the Nasdaq Composite Index, which is on track for a rise of about 8 percent, and the FTSE 100, which is on track for a gain of 5.7 percent.
The TOPIX index was up 1.36 percent at 1,774.88. The yen was at 123.33 yen to the dollar, nearing the 4-1/2-year low of 124.14 hit earlier this month.
Toyota, the world's largest automaker, rose 2.4 percent to 7,800 yen. A weaker yen means that Toyota and other exporters see bigger profits from their overseas sales. Kyocera Corp, a maker of electronics components, climbed 1.9 percent to 13,140 yen, becoming the biggest contributor to the Nikkei's rise.
Exporters were also helped by the Fed's decision to leave rates unchanged. Higher interest rates would crimp US consumer spending and would be a negative for Japanese companies that rely on demand from the world's largest economy.
Shares of Doutor fell 3.4 percent to 2,290 yen. The company's shareholders gave their approval on Thursday to a merger with Nippon Restaurant System, a restaurant chain operator. Hedge fund group Harbinger Capital Partners had argued the coffee chain would be better off on its own and should cut costs and speed up store openings. Harbinger had launched a proxy fight to stop the merger. Shares of Nippon Restaurant fell 4.5 percent to 3,850 yen. Investors were looking ahead to the Bank of Japan's quarterly tankan survey of business confidence, due to be released before the start of trade on Monday.
Shares of Toshiba Corp rose 3.9 percent to 1,075 yen after both Credit Suisse and Deutsche Securities raised their ratings on the Japanese electronics conglomerate.
Credit Suisse lifted its rating to "outperform" from "neutral" and boosted its target share price to 1,200 yen from 700 yen. Deutsche upgraded the stock to "hold", citing expectations of improving demand for NAND flash memory.
Shares of auto parts maker Denso Corp climbed 3 percent to 4,820 yen after Goldman Sachs raised its rating on the stock to "buy" from "neutral". Goldman also lifted its target price for the stock to 5,300 yen from 4,600 yen, saying capital investment is expected to peak this term, leading to increased cash flow.
Trade was moderate, with 1.74 billion shares changing hands on the Tokyo exchange's first section. Advancing shares outnumbered decliners by a ratio of more than three to one.