Sony shares post biggest daily gain in nine years after upgrading outlook

TOKYO (Reuters) - Sony Corp's <6758.T> shares surged on Thursday to post their biggest daily gain in nine years after the Japanese consumer electronics and entertainment group raised its full-year forecast to signal the worst of its troubles may be over.

Backed by cost cuts and stronger sales of sensors and videogames, SONY (JP6758.TK)on Wednesday trimmed its net loss forecast for the year through end-March and said it will post a full-year operating profit instead of a loss.

This was Sony's first upgrade of a forecast since Kazuo Hirai took over in 2012 and came after six previous warnings under his watch.

Its shares were up 11 percent at 3,073 yen at 0434 GMT (11.34 p.m. EST Wednesday) after briefly rising 18 percent to 3,269 yen, the maximum allowed for the day. The shares last rose 18 percent in early 2006.

Sony's shares have doubled in value over the past year and are among the top performers on the Tokyo Stock Exchange, although the company is on track to book its sixth net loss in seven years.

Under CFO Kenichiro Yoshida, who took the job almost a year ago, Sony has focused on cost cuts at its floundering consumer electronics units and shifted resources to more successful products.

It is, for example, raising capital spending on image sensors, which are used in smartphone cameras as well as automotive cameras and are fast emerging as one of the company's strongest product lines. Jefferies analyst Atul Goyal called Sony's numbers "the strongest result in the last decade".

Investors have also cited expectations that Yoshida was prepared to sell off or shut down operations that fail to turn profitable through costs cuts. They will get an update on Sony's thinking when Hirai presents the company's business strategy on Feb. 18.

The sharp rise in the shares could also be attributed to speculative trading, some investors said.

"Of course the market is recognizing the improvement in operating outlook from a loss to a profit but we're seeing a trend of strong reactions to even slight changes, positive or otherwise," said Mitsushige Akino, chief fund manager at Ichiyoshi Asset Management.

Shares in Hitachi Ltd <6501.T>, which gave a weaker-than-expected full-year outlook, fell 10 percent on Thursday.

"Given huge spikes in trading volume in these two shares, it is almost certain that some long-short hedge funds are closing long-Hitachi, short-Sony positions, or making fresh bets in Sony and against Hitachi," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

(Reporting by Ritsuko Ando and Tokyo markets team; Editing by Chris Gallagher and Muralikumar Anantharaman)