Nikkei jumps on weak yen, oil price slump; heads for big monthly gain

TOKYO(Reuters) - Japanese stocks gained ground on Friday as a weaker yen helped exporter stocks, while falling oil prices were seen as likely to stimulate global demand, supporting investor sentiment.

The Nikkei benchmark added 1.0 per cent to 17,410.87 by 0125 GMT, and is on course for a monthly gain of around 6 per cent. The Nikkei has risen over 10 per cent since the Bank of Japan stunned markets with fresh easing on Oct 31.

"Japan is amidst a perfect positive storm," said Stefan Worrall, director of equities cash sales at Credit Suisse.

"The oil price decline is stimulatory to world demand for Japanese exports, and offsets the impact of the weak yen on domestic energy costs."

The weak yen gave a leg up to major export shares. The Japanese currency traded at 118.21 against the US dollar by 0115 GMT, near weekly highs of 118.57.

Toyota Motor Corp jumped 1.6 per cent and Panasonic Corp gained 0.5 per cent, while Honda Motor Co added 1.0 per cent.

Oil prices plunged on Thursday after OPEC chose not to cut production despite huge oversupply and prices sliding by a third since June. With airlines set to benefit from cheaper fuel costs, ANA Holdings Inc was the Nikkei's best performer, jumping 5.3 per cent to its highest since March 2011. Japan Airlines Co Ltd also surged 4.0 per cent.

On the negative side of the ledger, OPEC's decision did hit Japan's oil production-related shares. Inpex lost 5.0 per cent, while Japan Petroleum Exploration Co Ltd fell 2.8 per cent.

Japan's core consumer price index, which includes oil products, slowed for a third consecutive month in October, highlighting the challenges facing the economy as it attempts to overcome deflation. But market participants were unconcerned, emphasising that the Bank of Japan's aggressive easing last month was a pre-emptive move against deflation.