TOKYO, Dec 17 (Reuters) - Japanese stocks rallied on Thursday morning after the U.S. Federal Reserve announced a gradual tightening cycle with its first rate hike in nearly a decade, boosting sentiment and risk appetite enough for investors to shrug off worse-than-expected Japan export data for November.
The 3.3 percent fall in exports from a year earlier compared with a 1.5 percent decrease expected by economists in a Reuters poll, but the impact was softened as investors took the U.S. rate hike as a mark of confidence in the world's largest economy.
The Nikkei share average had gained 2.3 percent to 19,483.38 in midmorning trade.
"The markets are really hanging onto Janet Yellen's comments about a strengthening economy, particularly in big export countries like Japan, which relies on U.S. consumers to buy its goods," said Gavin Parry, managing director of Parry International Trading.
"Recently things have been hanging on liquidity expansion, which has nothing to do with the economy, so the fact that she's talking up the economy now is in a sense a return to normality."
The yen resumed its weakening against the dollar following the Fed decision, which further fuelled the morning's upbeat sentiment and helped to boost the shares of major exporters. Panasonic Corp gained 1.5 percent while Bridgestone Corp climbed 3.3 percent and Toyota Motor Corp rose 2.1 percent.
Sumitomo Metal Mining Co shares jumped 5.9 percent to a two-week high after Credit Suisse raised its rating to "outperform" from "neutral" while Seibu Holdings climbed 4.8 percent after SMBC Nikko Securities raised its rating to "outperform" from "neutral".
The Topix subindex for insurance shares rose 4 percent while real estate shares were up 3 percent.
The broader Topix gained 2.3 percent to 1,576.06 with all of its 33 subindexes in positive territory.
The JPX-Nikkei Index 400 rose 2.3 percent to 14,199.21. (Reporting by Joshua Hunt; Editing by Edmund Klamann)