2014.03.3104:46:21UTC+00Nikkei reach 2-1/2-wk high on China hopes, exporters prompted by soft yen

Japanese shares spiked up 1 percent to a 2-1/2-week high on Monday morning trading action on surging hopes China would give stimulus measures to lift its declining economy, with exporters leading the way on a softer yen.

Traders also suspect purchasing by fund managers as books close for the fiscal year-end, though the benchmark Nikkei is still assumed to record its first quarterly drop in 1-1/2 years.

The benchmark Nikkei soared to 14,839.54 at the opening, its topmost mark since March 13, and was last exchanged at 14,808.35, 0.8 percent higher on the day.

"Investors' risk-off stance has receded after U.S. data and China hopes," said Naoki Fujiwara, chief fund manager at Shinkin Asset Management.

China's Premier Li Keqiang on Friday sought to reassure jittery global investors that Beijing was ready to support the freezing economy, stating that the administration had the needed policies in place and would push ahead with infrastructure investment.

Investors were also encouraged by data showing an increase in U.S. consumer spending in February, joining a string of positive numbers that suggested the world's largest economy was gaining a solid momentum.

Exporters, specifically automakers, fared well on the declined yen, with Nissan Motor Co Ltd, Honda Motor Co Ltd, Mazda Motor Corp, Fuji Heavy Industries Ltd, Mitsubishi Motors Corp bolstering between 2 and 4.1 percent in heavy exchange.

The yen backslide to 102.98 yen to the dollar on Friday, its worst mark in two weeks. It was last at 102.80 yen.

"Foreign speculators are buying the futures on expectations that fund managers would do some window dressing," Shinkin Asset's Fujiwara added, referring to the purchasing ahead of the new fiscal year beginning on Tuesday.

Still, on the quarter, the Nikkei was on the 9 percent downside since the beginning of the year and is marching toward for its first quarterly retreat in 1-1/2 years, hurt by a slowing in Japan's economy, worries over the tapering of the U.S. Federal Reserve's stimulus and China's economic woes.

The market has also been pegged back by concern that consumption will be crimped by Tokyo's sales tax increase to 8 percent from 5 percent on April 1.

Still, many see the Nikkei's sagged down as a necessary correction after a 57 percent hike last year.

"While Japan's performance has been negative since the start of 2014, we view the current phase as a healthy consolidation phase preparing the stage for a possible upside breakout," wrote Jesper Koll, head of Japanese equity research at J.P.Morgan, in a note to clients.

The market largely shrugged off a surprising decline in Japan's factory output for February.

Aeon Co Ltd. leaped as much as 3.3 percent after the Nikkei newspaper said the supermarket chain operator will launch low-cost smartphone services on April 4 valued at less than half the fees major domestic mobile carriers usually charge.

The broader Topix boosted 0.8 percent to 1,196.04 in moderate exchange, with exchanging volume at 28 percent of the full daily average for the past 90 days.

The JPX-Nikkei Index 400, a recently introduced gauge comprised of firms with a high return on equity and robust corporate governance, rallied 0.9 percent to 10,833.98.