TOKYO, Nov 29 - Japan's Nikkei rose 1.2 percent by mid-afternoon on Monday and appeared set to log its biggest gain in two weeks as steel and shipping firms kept climbing on views that booming demand and tight supply will boost their profits./br/ A pause in the rise of the yen, which hit a 4 Ѕ year high against the dollar on Friday, also supported the market by easing worries about the profit outlook of exporters such as Canon Inc. <7751.T>./br/ "It's probably premature to say the yen's rally is over, but the forex market is calm today and that's helped to ease one big worry hanging over the stock market," said Masatoshi Sato, an equity strategist at Mizuho Investors Securities./br/ The Nikkei average <.N225> was up 1.18 percent at 10,961.96 as of 0438 GMT, after falling 0.6 percent on Friday to a three-week closing low of 10,833./br/ The broader TOPIX index <.TOPX> was up 0.95 percent at 1,101.61./br/ Among a handful of exporters finding support from a pause in the yen's rally, office equipment giant Canon gained 1.17 percent to 5,210 yen, while electronics device maker TDK Corp <6762.T> rose 3.33 percent to 7,440 yen./br/ The dollar was trading at around 102.8 yen on Monday, but still not far off its recent low of 102.15 yen hit on Friday./br/ It was also well below the average rate of around 106 yen assumed by big Japanese manufacturers for October-March in the Bank of Japan's latest "tankan" survey of corporate sentiment./br/ Mizuho's Sato said the market would be closely watching to see the extent to which Japan's big manufacturers revise their forex assumptions in the next tankan survey, due in mid-December./br/ Despite a stronger yen Japanese firms are expected to log an aggregate 21 percent rise in recurring profits in the financial year to March, a record high for the second straight year, according to a recent report in business daily Nihon Keizai./br/ Steel firms and shippers, which rose despite a market sell-off on Friday, were in favour again on Monday due to healthy earnings outlooks and attractive valuations, traders said./br/ Nippon Steel Corp. <5401.T>, Japan's biggest steel maker, and rival JFE Holdings Inc <5411.T> continued to rise after Nissan Motor Co <7201.T> said last week it was short of steel./br/ Nippon Steel was up 1.19 percent at 255 yen, extending gains into a third session. JFE was up 1.37 percent at 2,965 yen./br/ Shipping firms were also higher after dry cargo freight rates <.BADI> hit a new all-time high, helped by China's massive demand for iron ore./br/ Kawasaki Kisen Kaisha Ltd. <9107.T>, Japan's No.3 shipper, was up 3.87 percent at 697 yen and second-ranked Mitsui O.S.K. Lines Ltd. <9104.T> gained 4 percent to 650 yen./br/ Toyo Communications Equipment Co Ltd <6708.T> was the day's biggest percentage winner, shooting up 20.2 percent to 476 yen after Seiko Epson Corp <6724.T>. said on Friday it would acquire Toyo to create the world's largest maker of quartz devices for timing products./br/ Shares in Seiko Epson, which said it would spin off its quartz business and merge it with Toyo in October 2005, were up 1.72 percent at 4,150 yen.