* Nikkei shoots up 4.9 pct in broad rally
* Bank of America profit view lifts confidence
* A halt in appreciation of yen helps exporters
TOKYO, March 13 (Reuters) - Japan's Nikkei average jumped 4.9 percent on Friday, led by banking shares such as Mitsubishi UFJ Financial Group after data showed U.S. retail sales stabilising and Bank of America reported a return to profit.
Canon Inc and other exporters also surged, helped by a halt in the appreciation of the yen.
"The economic situation seems to be better than what people were saying at the beginning of the year -- a view that has come about now that it seems that U.S. banks' earnings may not be atrocious," said Masaru Hamasaki, senior strategist at Toyota Asset Management.
Bank of America on Thursday provided the week's latest reassurance from the fragile U.S. banking sector, recipient of massive government bailouts. The largest U.S. bank said it was profitable in January and February and should be able to ride out the recession without any additional help from taxpayers.
Bank of America Chief Executive Kenneth Lewis echoed the heads of Citigroup Inc and JPMorgan Chase & Co who said earlier this week their banks were in the black for this year.
"But it'd be still an overstatement if I called that an improvement in the situation. News like that, coupled with the fact that stocks are undervalued, simply encouraged short covering in the market," Hamasaki said.
The benchmark Nikkei climbed 349.71 points to 7,547.96, after falling 2.4 percent on Thursday.
The broader Topix gained 3.1 percent to 722.34. It fell 3 percent the previous day to its lowest close since December 1983.
The U.S Dow Jones industrial average climbed 3.5 percent on Thursday after a government report showing sales at U.S. retailers fell by an unexpectedly small margin in February.
In New York, the dollar rose 0.6 percent to 97.81. Investors welcome a weaker yen as it boosts exporters' profits when repatriated.
Canon shot up 6.1 percent to 2,420 yen, while industrial robot maker Fanuc Ltd surged 9.8 percent to 6,150 yen. Honda Motor Co climbed 5.3 percent to 2,175 yen.
Among banks, Mitsubishi UFJ Financial Group shot up 6.3 percent to 421 yen. Mizuho Financial Group climbed 5.3 percent to 180 yen and Sumitomo Mitsui Financial Group advanced 6.2 percent to 2,845 yen. (Reporting by Aiko Hayashi; Editing by Edwina Gibbs)