Nikkei up nearly 2 pct, possible IMF aid for Italy in focus

TOKYO (Nov 28): The Nikkei average climbed almost 2 percent on Monday, helped by climbs in U.S. stock futures and by a report that the International Monetary Fund was considering support for Italy as bond yields across the euro zone spiked to new highs.

An unsourced report in Italian daily La Stampa said up to 600 billion euros could be made available at a rate of between 4-5 percent to give Italy breathing space for 18 months after it paid a record 6.5 percent for six-month paper in a punishing bond sale on Friday.

An IMF inspection team is expected to visit Rome in the coming days but no date has been announced.

"Sharp gains in U.S. stock futures are lifting Nikkei. But the talk of 600 billion euro aid is just based on report by local media. We'll have to see where the euro will go from here," said Kenichi Hirano, operating officer at Tachibana Securities.

The climb in U.S. stock futures comes after Wall Street fell for a seven straight day on Friday.

The Nikkei rose 1.9 percent to 8,315.84, while the broader Topix index gained 1.7 percent to 718.56.

The Nikkei fell 2.6 percent for the week last week after falling to a fresh two-and-a-half year low and the broader Topix slipped 1.9 percent.

But market participants remained as wary as ever about the deepening debt crisis in Europe.

"I thought Italy would stabilise a bit after Berlusconi left office, but the downgrade in Belgium, the high bond yields leaves an impression that Europe has entered a black hole," said Fumiyuki Nakanishi, strategist at SMBC Friend Securities.

"You can't tell where the next landmine is," he said.

Euro zone leaders are set to meet this week to approve rules for the European Financial Stability Facility (EFSF), which would clear the way for the 440 billion euro fund to attract private and public investors.

But the fund, which sources say may not be operational until January, may come too late to contain Europe's debt troubles.

Macromill jumped 4.4 percent to 854 yen after Yahoo Japan said it would become the top shareholder in the Internet-based research firm, lifting its stake to 24.4 percent from 9.8 percent. – Reuters