Nikkei jumps 3.4 pct, banks soar on U.S. bailout

By Taiga Uranaka

TOKYO (Reuters) - The Nikkei average jumped 3.4 percent on Monday, posting its biggest gain in five months, with financial shares soaring on the U.S. government's bailout of mortgage finance companies Fannie Mae and Freddie Mac.

Top lenders such as Mitsubishi UFJ Financial Group and No.2 Mizuho Financial Group made double-digit gains and a dozen other financial shares topped the list of gainers on the Nikkei.

Sharp gains were seen across a broad range of shares, including exporters like Toyota Motor Corp, helping the Nikkei erase steep losses made on Friday.

"The trend has changed and frankly, this has saved Japanese banks," said Kenichi Hirano, operating officer at Tachibana Securities.

"While they have less exposure to subprime loans (than U.S. and European rivals), they were facing the possibility of these agencies' bonds being written down," he said.

The takeover of the U.S. finance companies is the latest move by Washington to shore up the slumping housing market and was taken to ward off more global financial market turbulence.

The benchmark Nikkei average ended up 412.23 points at 12,624.46, the biggest percentage gain since a 4.2 percent advance logged on April 2.

The broader Topix rose 3.9 percent to 1,216.41.