* Global shift into riskier assets lends support
* China's interest rate hike taken in stride
By Anotoni Slodkowski
TOKYO, Dec 27 (Reuters) - Japan's Nikkei average rose 0.4 percent on Monday with increased appetite towards global equities in recent weeks lending support and helping offset any concerns from China's raising of interest rates at the weekend.
With global stocks and commodities hovering near multiyear highs on renewed confidence in global growth and analysts' expectations for the Nikkei to gain around 20 percent in 2011, investors have been piling into lagging Japanese stocks which, having lost some 2 percent in the year to date, are seen as relatively cheap.
Investors are entering 2011 in a relatively bullish mood, raising equity holdings to a 10-month high, increasing exposure to high-yield credit and cutting back on government debt, Reuters polls showed last week.
"Market players knew that the rate hike was coming and the overall consensus is that China will continue with money tightening into the next year so negative reaction is limited," said Mitsushige Akino, general manager at Ichiyoshi Investment Management.
People's Bank of China increased the benchmark lending rate by 25 basis points to 5.81 percent and the benchmark deposit rate by 25 basis points to 2.75 percent.
"Investors are focusing on sectors that are still most undervalued, such as real estate and banks. The Nikkei is predicted to rise significantly in 2011 and without gains in these shares such gains won't be possible," Akino said.
The benchmark Nikkei was up 0.4 percent or 44.91 points at 10,324.06 by midmorning. It had climbed to its highest level since May 14 on Wednesday.
The broader Topix index gained 0.2 percent to 903.22.
Shares of PC memory maker Elpida Memory jumped 5.2 percent after a newspaper report that it will start talks on capital tie-ups with two Taiwanese chipmakers.
Hitachi Ltd and Canon Inc advanced after the Nikkei newspaper said Taiwan's Hon Hai Precision Industry Co would invest about 100 billion yen ($1.2 billion) in an LCD panel joint venture between the two Japanese companies.
Hitachi gained 0.5 percent while Canon rose 0.9 percent.
Investors said that in the last trading week of the year the market will look for more good news showing economic recovery in the United States.
U.S. economic data due this week include the S&P Case-Shiller home price index and Consumer Confidence data on Tuesday and jobless claims and pending home sales on Thursday. (Additional reporting by Chikafumi Hodo; Editing by Chris Gallagher)