March 18, 2019 / 3:21 AM / a month ago

Nikkei up on chip-related stocks, weak data limits upside

* Chip stocks Sumco, Tokyo Electron surge

* Property, drugmakers, utilities have outperformed in March

* Investors cautious on concerns about weak China demand

By Ayai Tomisawa

TOKYO, March 18 (Reuters) - Japan's Nikkei rose on Monday as chip-related stocks followed gains in their U.S. counterparts on Friday, but weak February export data limited the market's upside.

The Nikkei share average rose 0.6 percent to 21,579.66 at the midday break.

U.S. stocks rallied on Friday, with the S&P 500 posting its best weekly gain since the end of November, while tech shares led Nasdaq to its best weekly rise this year.

Among Japanese chip-related stocks, Sumco Corp surged 3.7 percent and Tokyo Electron added 3.4 percent, while Advantest Corp gained 1.7 percent.

Index-heavyweights rose as well, with Fast Retailing up 0.8 percent and SoftBank Group Corp climbing 1.3 percent.

The upside was limited by concern about global demand after Ministry of Finance data showed that Japan's exports fell for a third straight month in February, due to declines in shipments of semiconductor production equipment and cars..

The data also showed exports to China, Japan's biggest trading partner, rose 5.5 percent year-on-year, rebounding from a 17.4 percent drop in January.

However, overall trade with the world's second largest economy remained weak. Even after averaging effects of the Lunar New Year holiday, China-bound shipments fell 6.3 percent in the January-February period from a year earlier.

"Concerns about weak demand from China have spread to other Asian regions, so unless the market confirms that the demand fall has hit bottom in Asia, investors will likely stay risk averse," said Daiju Aoki, regional chief investment officer and chief economist at UBS Securities Wealth Management.

Defensive sectors have outperformed in March, with real estate up 4.7 percent, drugmakers advancing 2.7 percent and utility stocks adding 1.1 percent. The Nikkei has gained 0.9 percent since the start of the month.

"Investors will probably keep buying defensive names until we see a sign of resolution in the U.S.-China trade war," said Yutaka Miura, a senior technical analyst at Mizuho Securities.

The broader Topix rose 0.4 percent to 1,609.40. (Reporting by Ayai Tomisawa Editing by Darren Schuettler)

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