Nikkei up 2.1 pct on relief over Fed's AIG rescue

(Updates to midday)

TOKYO, Sept 17 (Reuters) - The Nikkei share average rose 2.1 percent on Wednesday, rebounding from a steep fall the previous day as investors took heart from the news that troubled U.S. insurer American International Group (AIG.N) would avoid the same fate as Lehman Brothers LEH.P.

Financial shares such as top lender Mitsubishi UFJ Financial Group (8306.T) rose on easing concern about AIG.

The U.S. Federal Reserve said it would provide an $85 billion bridge loan to AIG and take nearly 80 percent in the company in a dramatic about-face as victims of the financial crisis kept piling up. [ID:nWEQ000175]

The benchmark Nikkei average ended the morning up 241.06 points at 11,850.78. The broader Topix .TOPX gained 1.3 percent to 1,131.97.