Japanese shares rise on earnings optimism, Wall Street boost

TOKYO, Feb 3 (Reuters) - Japanese shares rose on Wednesday, with transport stocks leading gains, as Wall Street's tech-driven rally overnight and strong domestic earnings forecasts boosted market sentiment.

The Nikkei share average .N225 edged up 0.56% to 28,520.55 as of 0204 GMT, while the broader Topix .TOPX gained 0.70% to 1860.12.

"Robust earnings of global IT firms have boosted investor expectations for better earnings of Japanese companies, while worries about a short-squeeze triggered by U.S. retail investors had been erased," said Koichi Kurose, chief strategist at Resona Asset Management.

U.S. stocks finished sharply higher for a second straight day overnight, helped by gains in Amazon.com AMZN.O and Google-parent Alphabet GOOGL.O ahead of their results and by optimism over progress on a U.S. pandemic relief package. .N

Mitsubishi Motor 7211.T , up 12.15%, led gains on the Nikkei 225 index after it cut its annual net loss forecast on Tuesday.

Panasonic 6752.T rose 3.11% after the electronics conglomerate said its battery business supplying Tesla Inc TSLA.O would be profitable this fiscal year, and raised its full-year operating profit forecast by more than half. Motor 7203.T jumped 3.66% after its autoparts affiliates Denso 6902.T and Aisin Seiki 7259.T raised their outlook. Denso gained 3.26% and Aisin Seiki rose 1.9%.

Pandemic-beaten transport shares gained, with West Japan Railway 9021.T rising 5.19% and East Japan Railway 9020.T gaining 3.47%. Japan Airlines 9201.T jumped 4.2% while ANA Holdings 9202.T rose 1.7%.

Transport shares were buoyed by hopes that a drop in the number of daily COVID-19 infections would boost travel, Kurose said.

Japan on Tuesday extended the state of emergency in Tokyo and other regions for another month, seeking to keep the upper hand over a COVID-19 outbreak, although daily case numbers have begun to edge down.