* Nikkei rises 1 pct, Topix up 0.8 pct
* Gains follows sharp fall on Fri, investors remain cautious
* Earning results so far have been disappointing
* JFE falls after no upward revision to earning
* Mitsubishi Motors up on dividend hopes after capital
By Tomo Uetake
TOKYO, Oct 28 (Reuters) - The Nikkei stock average bounced
back on Monday, recouping some of its steep losses suffered at
the end of last week, but investors remain cautious ahead of a
big earnings week for Corporate Japan and concerns over tight
credit conditions in China.
The benchmark Nikkei gained 1 percent to 14,225.98,
recovering after its 2.8 percent fall to a 2-1/2 week low of
14,088.19 on Friday.
The yen softened against the dollar, providing some relief
to exporters. It was last quoted at 97.48 yen.
The U.S. S&P 500 ending at another record high on
Friday also helped underpin Tokyo stocks. The Nikkei shed 4.3
percent in the last three sessions, hit mainly by concerns about
tight credit conditions in China, a major export market for
"The market is getting bought back after excessive selling
on Friday... I don't think we will be testing new highs," said
Kenichi Hirano, strategist at Tachibana Securities.
"This will end when all the short-covering is over. The
Nikkei won't make it above 14,500."
Investors remain reluctant to chase the market aggressively
as they await a further batch of earnings this week, with
results so far failing to impress.
JFE Holdings Inc slid as much as 4 percent after
Japan's No.2 steelmaker on Friday left its full-year profit
forecast unchanged, which was 25 percent below analysts'
expectations, citing slack overseas markets and extra spending
to upgrade facilities.
"Expectations of upward earning revisions were one big
driver for Japanese shares but the earning season got off to a
bad start," said Tachibana's Hirano.
Still, Hirano said there are hopes for more positive
earnings announcements in the days ahead.
Companies such as KDDI Corp, Komatsu Ltd
and Hitachi Construction Machinery Co Ltd are due to
report their results after the market shuts on Monday.
KDDI climbed 3.8 percent after the Nikkei newspaper said the
mobile carrier will likely report a record first-half operating
profit of about 340 billion yen ($3.5 billion) for the
April-September period, up 50 percent on the year.
Mitsubishi Motors Corp jumped as much as 4.9
percent on the news that the carmaker plans to raise around $2
billion in a public share offering as early as January to pay
back top shareholders for a 2004 bailout that enabled its
decade-long turnaround. [ID: nL3N0IG025]
Hopes that the capital raising will also allow Mitsubishi to
pay dividends for the first time in nearly 15 years eclipsed
concerns over dilution.
Analysts at Nomura said the Japanese market is likely to be
supported on its attractive valuations.
"A particularly important point is that Japanese stocks are
again trading at a P/E discount versus U.S. stocks," they wrote
in a report to clients on Friday, noting that the P/E ratio for
the TOPIX is 14.3, compared to 15.1 for the S&P 500.
The broader Topix added 0.8 percent to 1,187.62 in
relatively light trade, with volume at 27.9 percent of its full
daily average for the past 90 trading days.