Nikkei hits 8-1/2 mth high on weak yen, nears level before Lehman crash
* Nikkei highest since Dec, nears pre financial crisis level * Yen drops to six-year low vs dollar after vote went against Scottish independence * Long-term investors cautious against steep rise - analysts By Ayai Tomisawa TOKYO, Sept 19 (Reuters) - Japanese stocks extended gains to an 8-1/2 month high on Friday after the yen dropped to a six-year low, underpinned by the Federal Reserve's policy outlook, and after the first result in the Scottish independence vote went to the unioninst camp. The weakening yen drove exporter shares higher and swept the market near levels last seen before the collapse of Lehman Brothers. The Nikkei share average rose 1.5 percent to 16,301.08 at the midday break, nearing a December 30 high of 16,320.22. A breach of this level will mark the highest point since 2007. "It's all about easy money. The valuation does not look stretched, either," said Michiro Naito, executive director of equity derivatives strategy at JPMorgan, adding that there are few signs of significant downside risk at present. Gains were led by index-heavy stocks such as Fast Retailing Co and Fanuc Corp, which soared 3.7 percent. Exporters were also among the big winners as a weaker yen is seen as a boon to their earnings. Nissan Motor Co rose 1.2 percent, Fuji Heavy Industries jumped 3.4 percent and Advantest Corp climbed 1.7 percent. Sterling pushed sharply higher in Asian trade on Friday as the first result reported in the Scottish independence vote went to the unionist camp. Sterling's rise against the yen took the Japanese currency down over two full yen to reach 180.66 yen, its lowest since late 2008. This in turn put more pressure on the yen against the dollar - already on a bull run after the Fed this week said it could raise borrowing costs faster than expected when it starts its tightening cycle. The dollar rose to 109.20 yen, the highest since August 2008. Analysts said the yen's moves against the dollar will be key to how much further momentum is carried through in the market. "It's mainly short-term hedge funds chasing the market higher today by buying futures and index-heavy weight stocks," said Norihiro Fujito, a senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities. "Such buying may unwind...as their moves are fast, so we cannot be overly optimistic." The broader Topix gained 0.9 percent to 1,329.33, and the JPX-Nikkei Index 400 added 1.0 percent to 12,060.22. (Editing by Shri Navaratnam)
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