Nikkei to test fresh five-year highs, buoyed by U.S. stocks, German data

TOKYO (Reuters) - Japan's Nikkei share average is expected to scale fresh five-year heights on Wednesday, buoyed the S&P 500 ending at yet another record high and stronger-than-expected German industrial data.

The Nikkei <.N225> is likely to trade between 14,100 and 14,300, strategists said, while Nikkei futures in Chicago closed at 14,230 on Tuesday, up 0.5 percent from the Osaka close of 14,160.

"Foreign investors just don't stop buying Japanese shares," said Kenichi Hirano, operating officer at Tachibana Securities.

"The trend appears stable as it's pension funds and large global funds that are buying, with buy-and-hold strategies, not just hedge funds. We can't say this trend has just began, but I believe it will continue for a while."

Investor sentiment was boosted by a jump in German industrial orders, which confounded expectations for a drop, easing concerns over the euro zone's powerhouse, while U.S. stocks continued their strong run, with the S&P <.INX> hitting another record high.

On Tuesday, the Nikkei jumped 3.6 percent to 14,180.24, hitting its highest level since June 2008 and breaking above 13,988, the 61.8 percent retracement of its slide from February 2007 to October 2008. The broader Topix <.TOPX> index climbed 3.1 percent to 1,188.57.

The benchmark Nikkei has surged nearly 64 percent and the yen has weakened 23 percent against the dollar since mid-November, when Prime Minister Shinzo Abe began promising expansionary monetary and fiscal policies to revive the economy during his election campaign.

> Dow marks first close above 15,000, S&P ends at record <.N> > Euro flat vs dollar after rising on German data <FRX/> > Treasuries dip, but range bound in new debt supply <US/> > Gold down over 1 pct as ETF outflows continue <GOL/> > Oil down after rally on German data, Mideast tensions <O/R>



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(Reporting by Dominic Lau and Lisa Twaronite; Editing by Shri Navaratnam)