Nikkei rises for fifth day, led by exporters

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By Taiga Uranaka

TOKYO, May 16 (Reuters) - Japan's Nikkei stock average rose 0.2 percent on Friday, extending gains into a fifth day as stocks tracked overnight gains on Wall Street, led by exporters such as Honda Motor Co Ltd (7267.T: Quote, Profile, Research).

Stocks pared earlier gains as investors locked in profits and technical charts suggested the market may be overheated, with the Nikkei dipping into negative territory at one stage.

Still, many market participants said the Tokyo market remained on a solid upward trend as pessimism about the economic outlook recedes.

"The investment environment is improving. Many see the market as very strong," said Yoshihiro Ito, managing director at Okasan Asset Management.

"This week, we are seeing buying interest beyond rewinding of short positions. Money is flowing back to the equity market from safety assets like bonds."

The benchmark Nikkei .N225 ended the morning up 21.97 points at 14,273.71. The broader TOPIX index rose 0.7 percent to 1,402.23.

Investors had worried about Japanese companies' earnings outlooks this year, which were expected to project sharp profit declines due to a stronger yen and surging raw materials costs.