TOKYO, Oct 6 - Japanese stocks held firm in positive territory at mid-afternoon on Monday, propped up by big banks while auto shares moved higher following a sharp rise on Wall Street and with the dollar holding its ground on the yen. But as investors shifted money into Honda Motor Co Ltd <7267.T> and other exporters they took profits on insurance firm Aioi Insurance Co Ltd <8761.T> and other domestic-oriented stocks including property developer Mitsui Fudosan Co <8801.T>. "There is no doubt that the market is strong. The high level of turnover tells us there is little downside risk," said Haruki Takahashi, head of equity dealing at UFJ Tsusbasa Securities.
"But as the Nikkei approaches 11,000, almost like clockwork profit-taking sets in. We'll need a fall in the yen or a further rise on Wall Street to put us above 11,000 again." As of 0526 GMT, the Nikkei average <.N225> was up 0.28 percent or 30.49 points at 10,739.78, although off a morning high of 10,905.19. The TOPIX index <.TOPX> was up 0.40 percent at 1,071.12, poised to end higher for a fifth straight session. Investors, relieved that the dollar seemed to have stabilised above 110 yen , snapped up Honda and other exporters that were battered in recent trade as the dollar had looked set to fall below 110 yen for the first time in nearly three years. Honda, Japan's second-largest auto maker, rose 3.57 percent to 4,640 yen, while top-ranked Toyota Motor Corp <7203.T> gained 2.65 percent to 3,490 yen and consumer electronics maker Sony Corp <6758.T> put on 1.76 percent to 4,050 yen. Bank stocks also firmed after Morgan Stanley raised its investment outlook for sector to "attractive" from "in-line", citing the possibility of a medium- to long-term profit recovery for banks as economic recovery takes hold in Japan. Mizuho Financial Group <8411.T>, the world's largest bank by assets, was up 3.63 percent at 314,000 yen after hitting a record high of 326,000 yen. Mitsubishi Tokyo Financial Group <8306.T> climbed 2.95 percent to 838,000 yen. Also providing support was a weekend report in the Asahi Shimbun newspaper saying Mizuho was likely to more than double its group net profit forecast for the April-September first half of the business year early this week after the settling of a tax dispute with the Tokyo city government. But with money flowing to exporters on the back of a stabilisation of the yen and solid U.S. jobs data, investors took profits on domestic-oriented stocks such as insurers and real estate firms which had until last week put on impressive gains. Aioi Insurance fell 5.74 percent to 394 yen, retreating after five straight winning sessions. Millea Holdings Inc <8766.T>, shed 2.14 percent to 1.37 million yen, easing further after matching a record high of 1.44 million yen on Thursday last week. Mitsui Fudosan dropped 4.65 percent to 1,086 yen.//