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Japan Hot Stocks-Mitsubishi Electric, banks, car parts, brokers

TOKYO, Oct 29 (Reuters) - The following stocks are on the move on Tuesday. **MITSUBISHI ELECTRIC SOARS AFTER Q2 PROFIT UP**

Mitsubishi Electric, Japan's fourth-largest chipmaker, up 5.9 percent at 323 yen, after it said in afternoon trade that its operating profit rose in the second quarter.

Mitsubishi said its consolidated operating profit in July-September rose to 15.48 billion yen ($125.6 million), up 190 percent from the year-ago period.

The company retained full-year targets issued in April of a 25 billion yen net profit, reversing last year's 78 billion yen loss, and an operating profit of 65 billion yen, versus a 68 billion yen loss.

0512 GMT **SMBC , BANKS UP AHEAD OF ECONOMIC POLICY PACKAGE**

Banking shares are up, as investors sense a compromise one day ahead of the release of a key policy package.

UFJ Holdings Inc , the smallest of Japan's four megabanks and considered the weakest by analysts, up 4.52 percent at 162,000 yen. UFJ had tumbled over 50 percent since Heizo Takenaka was appointed chief financial regulator in a surprise cabinet reshuffle last month, signalling a tougher line on banks.

The world's biggest bank by assets, Mizuho Holdings, which has lost 43 percent over the same period, up 3.09 percent at 167,000 yen.

On Tuesday local media reported that due to fierce opposition, a plan to restrict the use of deferred tax assets -- a kind of tax break that forms around 40 percent of core bank capital -- would be delayed for a year.

"Investors are betting that some compromise will be made which is more favourable to banks. And due to steep falls in the last few weeks banking shares have already priced in the scenario of a tough clean-up," said Kazuyuki Naito, general manager of equities sales and trading at UFJ Tsubasa Securities. 0501 GMT **CAR PARTS MAKERS DOWN AFTER HONDA CUTS FORECAST**

Shares in car parts makers such as Press Kogyo Co are down after Honda Motor Co Ltd cut its full-year group operating profit estimate by 14 percent, highlighting a clouded earnings outlook for the sector.

Press Kogyo down 5.41 percent at 70 yen. Kayaba Industry Co Ltd , a leading maker of automobile shock absorbers, down 3.31 percent at 263 yen.

Oil seals maker NOK Corp , whose share price has almost tripled since the start of the year, down 1.93 percent at 1,471 yen. Bosch Automotive Systems Corp , a car parts maker affiliated to Robert Bosch of Germany, down 3.39 percent at 171 yen.

Like NOK, many car parts makers have posted solid gains this year to date, and fund managers say their rally may be coming to an end. 0349 GMT **SECURITIES STOCKS GET LIFT FROM BUSINESS FEDERATION COMMENTS** Top broker Nomura Holdings Inc up 2.78 percent at 1,443 yen, and number-two ranked Daiwa Securities Group Inc up 6.04 percent at 579 yen, helping the sector subindex gain 2.6 percent as the morning's top performer.

On Monday, local media reported the Japan Business Federation has called on the government to make capital gains on stock trading exempt from taxes until the benchmark Nikkei average recovers to about 12,000.

Hopes that effective tax measures to spur investment in equities were driving gains in the brokerage sector ahead of the government's anti-deflation package scheduled for Wednesday, traders said. The package may address capital gains tax issues. 0200 GMT

**SUMITOMO HEAVY UP ON FORECAST FOR HI PROFIT**

Sumitomo Heavy Industries Ltd up 6.76 percent or 5 yen at 79 after the major shipbuilder said during morning trade that it now sees a group net profit of 400 million yen ($3.25 million) for the first half, compared to a previous estimate for a loss of one billion yen.

The company also revised up its sales forecast for the six-month period ended September by 10 billion yen to 200 billion. 0200 GMT **REAL ESTATE STOCKS FIRMER ON LAND TAX REPORT**

Real estate shares were among the morning's top gainers after the Nihon Keizai Shimbun business daily said the government will propose tax cuts to spur investment in property and include them in the government's anti-deflation package due on Wednesday.

Mitsui Fudosan Co Ltd up 2.29 percent at 940 yen, Mitsubishi Estate Co Ltd up 1.42 percent at 926, and Tokyu Land Corp up 4.64 percent at 158 yen.

The paper said the government may abolish the land acquisition and ownership tax, a tax levied on unused land. It is also mulling not placing age limits on a planned tax break on assets transferred to younger generations, the paper said.

The real estate sector index up 1.41 percent, the second-best performing subindex in morning trade. 0155 GMT