* Ray Corp jumps as it rhymes with first character of new era name
* Japan Display jumps on capital injection news
* Bright China PMI offsets gloomy tankan
By Ayai Tomisawa
TOKYO, April 1 (Reuters) - Japan's Nikkei rose on the first day of the new fiscal year on Monday as hopes for U.S.-Sino trade talk hopes and factory activity surveys lifted China-related stocks, helping to offset weak domestic corporate sentiment.
After the morning market close, the Japanese government said that its new imperial era when Crown Prince Naruhito becomes emperor on May 1 will be called Reiwa.
The news triggered a spike in some stocks which have "connections" to the new era name, which consists of two characters.
Advertising firm Ray Corp, which rhymes with the first character 'Rei', jumped 7.3 percent after soaring as high as 19 percent in heavy trade, drawing attention of day traders who tried to make a quick buck on volatile share movement.
"The new era name is creating a festive mood in general," said Yutaka Miura, a senior technical analyst at Mizuho Securities.
He said that while some investors look to rising consumption during the Golden Week holiday, others, foreign investors in particular, are cautious before the unprecedented 10-day public holidays, which will run from late April to early May.
The Nikkei share average ended 1.4 percent higher at 21,509.03.
Japanese business confidence sank to a two-year low in the March quarter, the Bank of Japan's "tankan" survey showed on Monday, underscoring concerns that Sino-U.S. trade tensions and softening global demand were taking a toll on the export-reliant economy.
However, the market brushed off these concerns and took heart from news that the United States and China made progress in trade talks that concluded on Friday in Beijing.
Investors' risk appetite also returned after a private business survey showed that China's manufacturing sector unexpectedly returned to growth for the first time in four months in March.
"China's PMI indicates that China's economic slowdown might have hit the bottom," said Yoshinori Shigemi, a global market strategist at JPMorgan Asset Management, adding that the gloomy Japanese "tankan" was mostly expected, so market participants are looking ahead and taking heart from the China's PMI survey.
Companies with large exposure to the Chinese market gained ground. Yaskawa Electric jumped 5.0 percent, Fanuc Corp soared 2.4 percent and Komatsu Ltd surged 3.1 percent.
Japan Display Inc was in the spotlight, rising 10 percent after the company confirmed a weekend media report that it is in talks with external parties in cooperation with top shareholder INCJ.
Daiichi Sankyo Co extended its gains and soared 8.3 percent on its cancer drug partnership with AstraZeneca Plc . AstraZeneca will pay up to $6.9 billion to work with Daiichi Sankyo on a hotly-tipped experimental treatment for breast cancer.
The broader Topix gained 1.5 percent to 1,615.81. (Editing by Simon Cameron-Moore)