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Nikkei rises in cautious mood; Z Holdings, Line gain after merger

TOKYO, Nov 18 (Reuters) - Japan's Nikkei edged higher on cautious optimism, underpinned by gains on Wall Street and prospects of a Sino-U.S. trade deal, while Z Holdings and Line Corp advanced after a formal merger announcement.

The Nikkei share average rose 0.3% to 23,366.79 by the midday break on Monday, and the broader Topix stood flat at 1,697.06.

On Friday, Wall Street's main stock indexes closed at record levels, fuelled by fresh optimism over a potential easing of U.S.-China trade tensions and by big gains in shares of healthcare companies.

Chinese state media Xinhua said on Sunday that China and the United States had "constructive talks" on trade in a high-level phone call on Saturday, without giving details.

The benchmark Nikkei was flat in early trade but rose slightly after Hong Kong stocks opened firmer, later climbing more than 1%, despite clashes between anti-government protesters and police on the island, traders said.

Hong Kong police on Monday trapped hundreds of protesters inside a major university and demonstrators rampaged through a tourist district, after almost two straight days of standoffs that have raised fears of a bloody showdown.

In Tokyo, Z Holdings, formerly known as Yahoo Japan, and Line Corp climbed 1.9% and 1.8%, respectively, after the two sides formally annouced a merger plan shortly before the market open to create a $30 billion tech giant.

SoftBank Corp's internet unit Z Holdings was the fifth-most traded stocks on the main board, while the messaging app firm Line became the seventh-most traded.

Elsewhere, semiconductor-related shares fared well as Applied Materials soared 8% on Friday after the chip gear maker forecast first-quarter revenue and profit above Wall Street estimates.

Tokyo-listed Advantest jumped 2.9%, Disco Corp gained 2.3% and Tokyo Electron rose 1.7%. (Reporting By Tomo Uetake; Editing by Jacqueline Wong)