Nikkei stages modest rebound, euro worries cap gains
* Late-stage Wall Street rebound prompts short-covering
* Focus shifting to Friday euro zone finance minister meeting
* Nintendo tumbles 5 pct ahead of 3DS conference
By Lisa Twaronite
TOKYO, Sept 13 (Reuters) - The Nikkei rose modestly as short-covering emerged after a tumble the day before, although traders said worries about how Europe will resolve its deepening debt woes will prevent further gains.
A late-stage rebound on Wall Street on a report that Italy could get financial support from China helped the Nikkei move away from Monday's 2-1/2 year closing low.
The market is now looking ahead to a meeting of euro zone finance ministers on Friday, which U.S. Treasury Secretary Timothy Geithner is also set to attend.
While Europe's problems are in the spotlight, investors have not forgotten that the strength of the U.S. economy remains a concern.
"Fears of instability overseas, particularly the European situation, are preventing investors from aggressively buying, but Japanese stocks were oversold yesterday so we are seeing some position covering today," said Hiroichi Nishi, equity division manager at SMBC Nikko Securities.
The benchmark Nikkei rose 0.3 percent to 8,561.97 at the midday break, after sliding 2.3 percent a day earlier.
The broader Topix index added 0.4 percent to 744.25.
Volume was thin, with 647 million shares changing hands so far, on track to fall short of last week's daily average of 1.82 billion shares.
Nintendo Co fell 5.0 percent to 12,300 yen as investors unloaded the game console maker's shares ahead of Tuesday's conference on its 3DS handheld device, a fund manager said, adding that a recent negative view on the company by Macquarie Securities also dampened sentiment on the stock.
Shares of other game companies also slipped, with Capcom Co dropping 4.8 percent to 2,049 yen and Square Enix losing 4.4 percent to 1,460 yen.
Elpida Memory surged 7.7 percent to 532 yen after rival Micron Technologies shares rose as much as 6 percent in U.S. trading on Monday. UBS added Micron to its "most preferred" list based on an expected bottoming out in DRAM memory chip pricing, a factor that a fund manager said will also help shares of its competitors.
Resistance for the Nikkei lies at 8,600 and at 8,732, which was the settlement level for futures and options expired in September, market participants said.
The benchmark was trading well above its next major downside target of 8,227.63, the intraday low hit on March 15 when stocks were sold off after the March 11 earthquake and tsunami. Ahead of that, traders cited some support around 8,500.
Italy has asked China to make "significant" purchases of Italian debt, the Financial Times reported on its website on Monday.
(Additional reporting by Ayai Tomisawa; Editing by Joseph Radford)
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