Japanese shares rebound as Omicron fears recede

TOKYO, Dec 8 (Reuters) - Japanese shares jumped on Wednesday as investors grew hopeful that the Omicron coronavirus variant may be less disruptive for the global economy than initially feared.

As of 0120 GMT, the Nikkei share average .N225 was up 1.11% at 28,771.81 while the broader Topix .TOPX added 0.61% to 2,001.85, both reaching their highest level since Nov. 26.

Preliminary evidence indicates that Omicron likely has a higher degree of transmissibility but is less severe, top U.S. infectious disease expert Anthony Fauci said on Tuesday.

A broad range of equities advanced, led by a 2.7% rise in semiconductor-related stocks .MIJP0SE00PJP . Among them, Taiyo Yuden 6976.T rallied 4.3% while Tokyo Electron 8035.T added 2.4% and Lasertec 6920.T went up 2.8%.

Eletronics maker Omron 6645.T surged 4% while game maker Nintendo 7974.T added 3.1%.

U.S. stocks gained on Tuesday despite a rise in short-term bond yields, signalling that stock markets potentially digested the initial shock from worries that the Federal Reserve may accelerate tapering in its bond buying.

But some market players remained cautious.

"Looking ahead to next year, the Fed's tapering and rate hikes will remain a big theme and I don't think the market is completely done with corrections related to that," said Yuya Fukue, trader at Rheos Capital Works.

Interest rate-sensitive real estate companies fell, hit by a portfolio rebalancing related to an index adjustment, as well as a media report on the government's plan to reduce tax deduction for housing loans.

Mitsui Fudosan 8801.T fell 3.7% while Sumitomo Realty and Development 8830.T lost 2.7% and Mitsubishi Estate 8802.T shed 1.9%, hitting a one-year low.

The Topix real estate index .IRLTY.T fell 1.7%.

Reporting by Hideyuki Sano; Editing by Devika Syamnath

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