* Lixil jumps on hopes for MBO despite co's denial
* Baltic Dry index jumps on Friday
* Dollar up more than 1 pct vs yen last week
By Ayai Tomisawa
TOKYO, Jan 21 (Reuters) - The Japanese stock market advanced to an over one-month high on Monday, tracking gains in U.S. shares on Friday, pushing up cyclical shares such as shippers, while a weaker yen boosted exporters.
The Nikkei share average rose 0.5 percent to 20,758.74 at the midday break, after hitting as high as 20,892.68, its highest level since Dec. 19.
U.S. stocks rallied on Friday as increased hopes the United States and China would resolve their trade dispute lifted shares across sectors.
Analysts said that the Nikkei is on track to reach 21,000, a level it had traded last month before a year-end rout.
"It would be a bit difficult to rise towards 22,000 with current catalysts but the market is recovering," said Shoji Hirakawa, chief global strategist at Tokai Tokyo Research Institute.
Cyclical stocks such as exporters gained ground. Shares of TDK Corp surged 3.6 percent, while those of Sumco Corp and Nidec Corp jumped 4.1 percent and 3.8 percent, respectively.
The Japanese yen recovered 0.15 percent against the dollar after falling more than 1 percent last week.
"Commodity trading advisers are likely covering their short positions on Japanese stocks on the back of a recovery in the dollar-yen levels and oil prices," said Masanari Takada, a cross-asset strategist at Nomura Securities.
Shippers outperformed after the baltic dry index, or freight charges, jumped 3.3 percent. Shares of Mitsui OSK Lines rose 3 percent. Kawasaki Kisen soared 4.1 percent, after the Nikkei business daily reported that the company is considering resuming a dividend payout for the year ending March 2020.
Shares of Lixil Group Corp jumped 7 percent after the Nikkei Business reported that its board decided last year to consider delisting from Japan through a management buyout (MBO) and moving its headquarters to Singapore. The company denied the report, but investors welcomed the report anyway.
"Lixil's stock price had been falling quite sharply due to short-selling, but short sellers are seen covering their positions because in case the company goes with a management buyout, it would buy the stock at a higher price than what is trading now," said a fund manager at a Japanese asset management firm.
The broader Topix rose 0.8 percent to 1,569.83. (Reporting by Ayai Tomisawa; Editing by Rashmi Aich)