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Nikkei rallies on stimulus hopes, logs biggest weekly gain ever

SYDNEY, March 27 (Reuters) - Japan's share benchmark Nikkei rebounded on Friday and logged its biggest weekly gain on record as policymakers around the world launched a raft of stimulus efforts to mitigate the economic damage from the coronavirus.

The Nikkei average rose 3.9% to 19,389.43 points, recouping most of the 4.5% losses suffered on Thursday. The index jumped more than 200 points in the final minute of trade on passive investors' buying to reinvest expected dividend payments.

For the week, the index surged 17.1%, but it is still down 18% for the year after the explosive spread of the virus triggered a global economic crisis and a meltdown in financial markets.

The Nikkei's volatility index, a measure of investors' volatility expectations based on option pricing and considered to be a fear gauge, fell 3.2% to 52.47, moving further away from a nine-year peak of 60.86 hit on March 16.

Prime Minister Shinzo Abe is expected to order his cabinet to compile an economic package with spending worth $135 billion or more, government officials and lawmakers say.

Wall Street's main indexes surged about 6% on Thursday as record weekly U.S. jobless claims came in below investors' worst fears and the focus stayed on an unprecedented $2 trillion stimulus package.

The staggering spike of 3.28 million in U.S. jobless claims led Fed Chair Jerome Powell to promise the bank would lend "aggressively" to cushion the impact of the coronavirus.

The broader Topix advanced 4.3% to 1,459.49, also helped by massive buying by passive investors.

All but one of the 33 sector sub-indexes on the Tokyo Stock Exchange were higher, with more defensive electric and gas and pharmaceutical being among the top three performing sectors.

Semiconductor-related companies were in demand, with Tokyo Electron Ltd jumped 5.1% and Shin-Etsu Chemical Co Ltd soared 6.1% after U.S. chipmaker Micron Technology Inc forecast current-quarter revenue above analysts' estimates.

As Tokyo moves closer toward a potential citywide lockdown over the coronavirus pandemic, shares of food makers and drugstores were also sought after.

Nichirei Corp climbed 7.2%, Nissin Foods Holdings Co Ltd gained 6.6% and Ajinomoto Co Inc rose 5.8%, while MatsumotoKiyoshi Holdings Co Ltd surged 7.5%.

"Japan and the rest of Asia look likely to get their economies back on their feet way before the U.S. and Europe," said Nicholas Smith, Japan strategist at CLSA Securities.

"If you think Japan and the rest of Asia will recover first what do you buy? Japanese stocks that are most exposed to China."

Indeed, Shiseido Co Ltd advanced 5.1% and Unicharm Corp gained 4.0% on Friday.

Bucking the overall trend, the TSE REIT index shed 2.5% as investots booked profits after a recent rally.

Elsewhere, the Nikkei's heavyweight SoftBank Group added 2.9%, a day after slumping 9.4% on Moody's downgrade. (Reporting by Tomo Uetake; Editing by Amy Caren Daniel and Kim Coghill)