Nikkei rises 0.3 pct, shippers gain, Nikon climbs

* Earnings worries due to yen linger, cap gains -analyst

* But hopes for positive U.S. earnings results lend support

* Nikon jumps on upgrade, shippers gain on freight index

By Masayuki Kitano

TOKYO, Oct 8 (Reuters) - Japan's Nikkei average rose 0.3 percent on Thursday, with shares of shipping firms surging as a key freight index hit a seven-week high on hopes of fresh Chinese demand while digital camera maker Nikon Corp (7731.T) climbed on a brokerage upgrade.

With the yen hovering near an 8-½ month high against the dollar, worries about the impact of a strong yen on exporters' earnings limited the Nikkei's gains.

But Tokyo shares were supported by hopes for positive U.S. earnings announcements, especially after aluminium company Alcoa Inc (AA.N) posted a surprise third-quarter profit on Wednesday.

"One factor supporting carmakers and electrical machinery makers is the hope that other U.S. earnings will turn out well," said Kiyoshi Noda, chief fund manager for MU Investments.

"Overall, while it's true that the yen's strength is harsh, prices of commodities are rising and gradually people seem to be sensing that the global economy may not be all that weak." Toshiba (6502.T), whose U.S. subsidiary is Westinghouse, climbed after saying it has been certified as a nuclear reactor supplier by the U.S. Nuclear Regulatory Commission.

Shipping firms extended gains after the Baltic Exchange's main sea freight index .BADI hit a seven-week high and after Bank of America Merrill Lynch raised its ratings on the three major shippers to "neutral" from "underperform". [ID:nL7708072]

The Nikkei rose 32.87 points to 9,832.47 .N225, pulling further away from an 11-week intraday low of 9,628.67 hit on Tuesday. The broader Topix rose 0.2 percent to 887.59 .TOPX.

Trade was moderate on the Tokyo exchange's first section, with 1.9 billion shares changing hands, in line with last week's daily average.

The electrical machinery .IELEC.T and transport equipment .ITEQP.T sectors edged higher, and some exporters that had retreated in recent weeks clawed higher.

EXPORTERS RISE

Toyota Motor Corp (7203.T) rose 1.7 percent to 3,500 yen, Honda Motor gained (7267.T) 1.3 percent and Panasonic Corp (6752.T) climbed 2.1 percent to 1,255 yen.

Toshiba rose 3.3 percent to 475 yen.

"If you exclude the rebound factor, there's really no fundamental reason to buy exporters. There's a risk they could drastically cut their earnings forecasts going forward due to the strong yen," said Fumiyuki Nakanishi, a manager at SMBC Friend Securities.

The yen stood at around 88.40 yen to the dollar JPY= on Thursday, hovering near an 8-½ month high of 88.01 yen to the dollar hit on trading platform EBS on Wednesday.

Many Japanese exporters have set their exchange rate assumptions for the dollar at around 90-95 yen for the financial year to next March.

A stronger yen dismays investors as it curbs exporters' profits when they are repatriated.

U.S. stocks showed little movement on Wednesday following two days of strong gains but after the close futures edged higher on Alcoa's earnings announcement, the first major news of the current U.S. earnings season. [ID:nN07320124]

Shipping firms surged to extend robust gains made the previous session.

Mitsui O.S.K. Lines (9104.T) shot up 5.8 percent to 565 yen, Kawasaki Kisen Kaisha (9107.T) surged 7.4 percent to 365 yen and Nippon Yusen KK (9101.T) advanced 7.3 percent to 368 yen.

Nikon Corp rose 4 percent to 1,598 yen after Mitsubishi UFJ Securities upgraded its rating three notches and set a target price of 2,020 yen.

The brokerage said Nikon's semiconductor and liquid crystal display production equipment divisions would show an improvement in operating income and also forecast strong sales of digital single lens reflex cameras.

Sega Sammy Holdings (6460.T) surged 8.5 percent to 1,219 yen after Mizuho Securities lifted its rating and set a target price of 1,450 yen, saying the company is now at a point at which it deserves credit for improved earnings in the pachinko slot machine business.

Declining stocks outnumbered advancing ones 844 to 703. (Additional reporting by Aiko Hayashi; Editing by Michael Watson)