Nikkei climbs to near 3-week high on Fed stimulus

A stock quotation board is seen through a hole of a leaf outside a brokerage in Tokyo September 12, 2012.

TOKYO (Reuters) - Japan's Nikkei average climbed 1.3 percent to its highest level in nearly three weeks above 9,000 on Friday after the Federal Reserve launched new stimulus for the U.S. economy.

The fresh dose of U.S. stimulus boosted risk appetite as beaten-down cyclicals such as miners and shippers, which have a relatively higher correlation with the health of the economy, rallied the hardest.

The mining sector .IMING.T jumped 3.7 percent, while shippers .ISHIP.T rose 4.6 percent and steelmakers .ISTEL.T gained 2.9 percent.

The Nikkei had advanced 119.58 points to 9,114.73 by midmorning, breaking above its 200-day moving average at 9,002.78 and the 23.6 percent retracement of its rally from July 25 to August 20 at 9,012.

"We are somewhere between 2 and 2.5 to 1 (buy to sell orders). A decent amount of flow, I would say ... not much hedge fund money but long-only primarily," a senior dealer at a foreign bank said.

"The thing we are watching is the currency. Japan is going to continue to underperform so long as the currency strengthens.

The open question is whether the Bank of Japan is going to step in and actually does something to the currency."

He said the other question was whether the BOJ would follow its U.S. and European counterparts to offer further monetary easing at its meeting next week.

The Nikkei is up 7.8 percent this year, underperforming a 16.1 percent gain in the U.S. S&P 500 .INX and an 11.4 percent rise in the pan-European STOXX Europe 600.

The yen hit a seven-month high of 77.13 per dollar on Wednesday, and was quoted at 77.65 yen on Friday. A stronger yen is usually a negative factor for exporters.

But so far, shares in many exporters were taking part in the rally. Toyota Motor Corp (7203.T) rose 1.1 percent, Honda Motor Co (7267.T) added 0.8 percent and Canon Inc (7751.T) gained 2.9 percent.

The broader Topix index rose 1.3 percent to 753.52.

Japan's top investment bank Nomura Holdings (8604.T) rose 3.5 percent after it said it had restructured the management team at its U.S. equities group, which comes a week after it announced a plan to scale back its traditional stock trading businesses worldwide.

Other gainers included Hitachi Ltd (6501.T), which added 3.1 percent after Japan's biggest industrial electronics company said it would increase its first-half dividend to 5 yen per share from 3 yen a year earlier.

But convenience store operator Seven & I Holdings Co Ltd (3382.T) shed 2.1 percent after the Nikkei business daily said the company's operating profit for March-August would likely fall 2 percent to 147 billion yen, marking its first decline for the period in three years.

(Additional reporting by Sophie Knight; Editing by Chris Gallagher)