Nikkei ends at 2-week high; automakers gain as U.S. calls off tariffs on Mexico

* Automakers rise as investors unwind short positions -
analyst
* Banks, insurers underperform following U.S. bond yields
drop
* Mobile carriers sag after report on govt plan to cap
cancellation fee

By Ayai Tomisawa and Tomo Uetake
TOKYO, June 10 (Reuters) - Japan's Nikkei share average
ended at a two-week high on Monday, led by automakers after U.S.
President Donald Trump withdrew a threat to impose tariffs on
Mexican imports.
The benchmark Nikkei .N225 rose 1.2% to 21,134.42 points,
its highest close since May 28.
Toyota Motor Corp 7203.T jumped 1.8%, Honda Motor Co
7267.T advanced 1.5% and Mazda Motor Corp 7261.T climbed
1.1%. Japanese automakers have long built vehicles in Mexico,
taking advantage of its cheap labour, trade deals and proximity
to the United States, the world's largest auto market after
China. The United States and Mexico struck a deal on Friday to
avert a tariff war, with Mexico agreeing to rapidly expand a
controversial asylum program and deploy security forces to stem
the flow of illegal Central American migrants. Trump had earlier
threatened to impose tariffs on Monday. "Investors are unwinding their short positions as risk
sentiment shot up," said Nobuhiko Kuramochi, a strategist at
Mizuho Securities. "Receding concerns about U.S.-Mexican trade
issues and hopes for loose monetary policy are raising
investors' risk appetite."
Financials in Japan came under pressure, however, after weak
job data reinforced expectations that the U.S. Federal Reserve
would move to cut interest rates. U.S. Treasury yields tumbled, with 10-year yield hitting
2.053%, its lowest since September 2017.
That pulled down Japanese financial firms, which hunt for
higher yields, with Sumitomo Mitsui Financial Group 8316.T
dropping 0.2%, while Dai-ichi Life Holdings 8750.T and T&D
Holdings 8795.T and slipped 0.6% and 0.4%, respectively.
"U.S. short-term yields would stay pressured for a while,
but hopes that the Fed would cut rates as a preventive measure
before the economy enters a recession are cheering investors,"
Kuramochi said.
Mobile carriers also were sold after the Nikkei business
daily reported that the government will require major operators
to slash penalty fees when customers cancel their contracts.
NTT Docomo 9437.T dropped 1.0 percent, while KDDI Corp
9433.T and SoftBank Corp 9434.T fell 1.6% and 1.7%,
respectively.
Nissan Motor Co 7201.T shares showed limited reaction to
news that France's Renault SA RENA.PA and the Japanese
automaker clashed over governance reform. Nissan
closed up 0.8%.
The broader Topix .TOPX ended the session 1.3% higher at
1,552.94.