Nikkei hits 8-month high, led by resources

* Nikkei climbs 1.7 pct

* Shippers power higher on brokerage upgrades

* Hopes for Chinese indicators also boosting demand

TOKYO, June 10 (Reuters) - Japan's Nikkei stock average rose 1.7 percent on Wednesday, touching an eight-month high as resource shares such as Mitsubishi Corp (8058.T) surged on high oil and metals prices amid hopes for China's economy. Shipping firms surged, with Mitsui O.S.K. Lines (9104.T) rising more than 5 percent after brokerage upgrades for the sector and individual companies, saying their current share prices appeared undervalued.

The benchmark Nikkei .N225 gained 170.63 points to 9,957.45, a fresh eight-month high and within sight of the psychologically key 10,000 line. The broader Topix .TOPX rose 1.8 percent to 935.01. "There's a lot of general optimism and signs that the economy's improving over the longer term, and not really any reasons to sell at this point," said Hiroaki Osakabe, a fund manager at Chibagin Asset Management.

"Certainly there's still a gap between company profits and the rally we're seeing here on the Nikkei, but a lot of retail investors are coming back into the market now, and there's quite a flow of funds into stocks."

Buying interest was also strong ahead of Friday's settlement of Nikkei futures and options, and expectations for Chinese economic indicators due out later in the week helped buoy the market as well.

China's industrial production rose by 8.9 percent in May from a year earlier, well ahead of forecasts and the fastest growth since September last year, two separate Chinese newspapers reported on Wednesday. [ID:nPEK63329]

"If this is true, it certainly would prove to be quite a boost for the market," said Hideyuki Ishiguro, a supervisor in the investment advisory department of Okasan Securities.

Machinery stocks such as Komatsu Ltd (6301.T) advanced, even after data showed Japan's core machinery orders unexpectedly fell 5.4 percent in April, suggesting any recovery in capital expenditure is still fragile. [JPMORD=ECI]

Oil prices raced towards $71 a barrel on Wednesday after data showing a steep drop in U.S. crude inventories and a U.S. government report revised global demand expectations higher, while smelters were bolstered after copper prices scaled an eight-month peak. [O/R]

Trading house Mitsubishi rose 5.2 percent to 1,974 yen, while fellow trader Marubeni Corp (8002.T) rose 5.3 percent to 478 yen. Sojitz (2768.T) surged 6.1 percent.

Oil and gas field developer Inpex (1605.T) gained 3.5 percent to 833,000 yen.

Shares of smelters also climbed after copper hit eight-month peaks on Tuesday. Dowa Holdings (5714.T) shot up 7.4 percent to 466 yen and Sumitomo Metal Mining (5713.T) advanced 5.8 percent to 1,514 yen.

Shipping firms gained. Mitsui O.S.K. Lines jumped 5.8 percent to 693 yen, Nippon Yusen (9101.T) rose 4.1 percent to 455 yen and Kawasaki Kisen (9107.T) added 6.4 percent to 449 yen.

Credit Suisse hiked its rating on the shipping sector to "overweight" from "market weight", saying earnings are likely to bottom in the current financial year. (Reporting by Elaine Lies; Editing by Hugh Lawson)