RTRS: Nikkei edges up as banks gain, Honda and Sanyo drop
* Nikkei rises 0.9 pct as banks gain after Fed rate cut
* Investors await outcome of BOJ meeting, expect cut
* Honda slides on profit warning
* Sanyo drops after Goldman agrees to Panasonic bid for Sanyo (Adds stocks, details)
By Aiko Hayashi
TOKYO, Dec 18 (Reuters) - The Nikkei average rose 0.9 percent on Thursday as bank shares extended gains after the U.S. Federal Reserve slashed rates, though Honda Motor (7267.T: Quote, Profile, Research, Stock Buzz) slid after cutting its profit forecasts in its third warning this year.
Panasonic Corp (6752.T: Quote, Profile, Research, Stock Buzz) rose after Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz) agreed to the electronics giant's offer to buy its stake in Sanyo Electric Co Ltd (6764.T: Quote, Profile, Research, Stock Buzz), but Sanyo shares fell as the bid was only slightly sweeter than one Goldman rejected earlier this month. [ID:nT242792]
A bold rate cut to as low as zero by the U.S. central bank has ratcheted up the pressure on a reluctant Bank of Japan to follow suit this week, with economists saying to hold back would rock Japanese markets and worsen the crisis. [ID:nT222002]
The BOJ starts its two-day policy meeting later in the day.
"Hopes for an economic recovery in the long-term are helping buoy the market as we seem to be getting into a phase of zero interest rates globally," said Yoshinori Nagano, a chief strategist at Daiwa Asset Management.
The benchmark Nikkei .N225 ended the morning up 74.52 points at 8,687.04, after opening down 0.6 percent.
The broader Topix .TOPX gained 0.3 percent to 841.10.
The dollar was little changed at 87.30 yen , but stayed in sight of 87.13 yen hit on Wednesday, the lowest since mid-1995, weighing on some exporters.
In Britain, zero interest rates are a possibility and further capital injections may be required in the banking sector, Bank of England Deputy Governor Charles Bean said in an interview published on Wednesday. [ID:nLH402761]
BANKS GAIN, HONDA AND SANYO FALL
Banks extended gains booked on Wednesday. Mitsubishi UFJ Financial Group (8306.T: Quote, Profile, Research, Stock Buzz), Japan's biggest bank, rose 2.3 percent to 531 yen. Second-ranked Mizuho Financial Group (8411.T: Quote, Profile, Research, Stock Buzz) climbed 3.6 percent to 246,100 yen and No. 3 Sumitomo Mitsui Financial Group (8316.T: Quote, Profile, Research, Stock Buzz) jumped 6.2 percent to 376,000 yen.
