(Reuters) - Japan's Nikkei share average advanced to a three-month high on Monday as the U.S. economy showed further improvement with forecast-beating jobs data, boosting hopes for Japanese firms, which have disappointed in the latest quarterly earnings season.
The improving jobs data lowered the chance of further stimulus by the U.S. Federal Reserve and supported the dollar against the yen.
That's pretty big for exporters, said Nicholas Smith, Japan strategist at CLSA.
This time around, you are likely to get global trade growth at the same time as a weaker yen and playing on strong operational gearing. Both together should be pretty good for corporate profits.
Japan's corporate earnings results have been disappointing so far. Out of 109 Nikkei companies that have reported, two thirds of them failed to meet market expectations, Thomson Reuters StarMine data showed. That compares with just one-third of S&P 500 <.SPX> companies.
Smith recommended investors buy automakers and Nomura Holdings (8604.T) to tap into the better growth picture.
Toyota Motor Corp (7203.T), Nissan Motor Co (7201.T) and Honda Motor Co (7267.T) rose between 2.7 and 3.6 percent, while Nomura added 3.7 percent and Mizuho Financial Group (8411.T) climbed 2.5 percent.
The Nikkei <.N225> was up 1.3 percent at 8,943.07 and the broader Topix <.TOPX> rose 1.4 percent to 771.60, shrugging off worries over Greece whose coalition parties must tell the European Union by Monday whether they accept the painful terms of a new bailout deal.
Among bluechips, Panasonic Corp (6752.T) surged 7.2 percent. Nomura said Panasonic's writedowns for its Sanyo Electric unit marked the end of bad news after the company warned on Friday of a record annual $10.2 billion net loss, but the brokerage said the outlook for business conditions remained unclear.
Others also made robust gains on the back of U.S. jobs and factory orders data.
You shouldn't base your investment on one set of data but these are two points of data that reinforce the cyclical argument, said Naomi Fink, head of Japan strategy at Jefferies Japan.
Sony Corp (6758.T) gained 4.7 percent on Monday and Canon Inc (7751.T) added 1.4 percent.
Fink said automakers had rebounded sharply this year on improving signs of the U.S. markets, but other cyclical sectors, such as electronics, and glass and ceramic had lagged.
Nikon Corp (7731.T) soared 10.9 percent to a 20-month high after it doubled its net profit forecast for the year to March.
Elpida Memory Inc (6665.T) slipped 2.3 percent to 339 yen after U.S. rival Micron Technology Inc (MU.O) CEO and chairman Steve Appleton died in a plane crash on Friday, casting doubt over whether possible acquisition plans for the troubled Japanese company can move forward.
According to Nomura, mutual funds stepped up their net selling of Japanese equities, with $211 million outflows for the week of Jan. 26 to Feb. 1 after $54 million outflows the previous week.
(Editing by Edwina Gibbs)