TOKYO, March 17 (Reuters) - Japanese stocks rose on Thursday after the U.S. Federal Reserve signalled fewer interest rate hikes this year, boosting investors' appetite for riskier assets.
The Nikkei share average climbed 1.3 percent to 17,198.56 points by mid-morning.
"Removing interest rate risk from the near horizon has been enough to coax money back into risky assets, but price increases in gold and the depreciation of the dollar would indicate that quantification of the degree of risk still varies greatly," said Martin King, co-managing director at Tyton Capital Advisors.
"The Fed will be off the radar for a little while and the full brunt of Japan investor scrutiny will return to the Bank of Japan."
The U.S. dollar fell sharply and touched a one-week low against the yen after the Federal Reserve left rates unchanged on Wednesday, as expected, and reduced expectations for hikes in 2016 to two from four.
Market players said the yen's appreciation, combined with muted consumer spending and tepid corporate reform, could continue to cast doubts on efforts by the government and Bank of Japan to reflate the long-moribund economy.
Foreign investors remained net sellers of Japanese stocks last week, selling a record 1.5832 trillion yen worth of shares in the week through March 12, according to capital data flows provided by Japan's Ministry of Finance.
Shares of Japanese exporters, which are usually highly correlated with any currency moves, were little fazed by the firmer yen.
Sony Corp and Panasonic Corp gained 3.7 percent and 1.8 percent, respectively. Auto exporters Toyota Motor Corp and Nissan Motor Co Ltd were both 1.8 percent higher, while Bridgestone Corp climbed 2 percent.
Askul Corp shares soared 8.9 percent to a 2-month high after the office products retailer announced strong profit growth and increased revenue forecasts after the end of trading on Wednesday.
Firmer oil prices also helped support global sentiment as U.S. crude rose more than 2 percent in early Asian trade on Thursday.
The broader Topix rose 1.2 percent to 1,377.08 with all but three of its 33 subindexes in positive territory during midmorning trade.
The JPX-Nikkei Index 400 climbed 1.2 percent to 12,443.81. (Reporting by Joshua Hunt; Editing by Kim Coghill)