Nikkei closes up 1 pct as Europe fears ease

* Benchmark below resistance at 25-day moving average
* Italy bond auction awaited to gauge investor confidence
* Olympus shares untraded with glut of buy orders
* Banks outperform ahead of earnings reports

By Mari Saito
TOKYO, Nov 14 (Reuters) - The Nikkei average gained
more than 1 percent on Monday, helped by an easing of fears
about Europe's debt crisis, but investors were reluctant to push
the market higher ahead of an Italian debt auction later in the
day.
Shares in scandal-hit Olympus Corp were overwhelmed
by buy orders and remained untraded after a source familiar with
the case said a fine could be imposed for false financial
reports, a move that could help it avoid a delisting.

Newly appointed leaders Mario Monti in Italy and Lucas
Papademos in Greece are racing to form governments and limit the
damage from the debt crisis that has engulfed the region.

In focus will be Italy's five-year government bond auction
due later on Monday, a critical test for the leadership of
Monti, a former member of the European Commission.
"Just because there are new faces at the top in Greece and
Italy doesn't mean their troubles have suddenly gone away," said
Fumiyuki Nakanishi, a strategist at SMBC Friend Securities.
Banking shares outperformed ahead of earnings reports later
in the day, following gains in U.S. financial shares on relief
about the outcome of Italy's political crisis.
The Nikkei average closed up 1.1 percent at
8,603.70, after falling 3.3 percent last week. The broader Topix
index gained 0.9 percent to 735.85.
Volume was relatively thin with 1.41 billion shares changing
hands on the main board, down from last week's average of 1.74
billion shares.
"Japan's market is like a bathtub with a very low
level of water. There's no way to make ripples or waves in the
market because of how low liquidity is. It's as if we're
splashing around in low water," said Hajime Nakajima, a
wholesale trader at Cosmo Securities.
The Nikkei's 25-day moving average of 8,754 is a key
resistance point, strategists say, with the benchmark needing to
rise above that level before investors become confident that
stocks could resume an uptrend.
"The overall sentiment in the market is negative. There's
the unsavoury Olympus scandal and the whole corporate governance
issue which weighs on the market," said Nakajima.
For now, strategists say the Nikkei will likely remain in a
narrow range, with low expectations and less appetite for risk.
The market showed a muted reaction to Japan's July-September
gross domestic product data released before the open, which
showed the economy bouncing back from a recession led by strong
exports and consumption. But the yen's strength and sluggish
global growth cloud the outlook.

BANKS GAIN AHEAD OF EARNINGS, OLYMPUS UNTRADED
Ahead of earnings after the close on Monday, Mitsubishi UFJ
Financial Group added 1.8 percent to 334 yen. Sumitomo
Mitsui Financial Group gained 2.2 percent to 2,066 yen
and Mizuho Financial Group rose 2 percent to 103 yen.
Nomura Holdings jumped 5.8 percent to 257 yen and
was the second heaviest-traded issue by turnover, as Japan's top
brokerage benefited from the market's rebound.
Olympus shares remained untraded on Monday due to a glut of
buy orders and closed up by their daily limit at 540 yen, 17.4
percent above Friday's close.
The Tokyo Stock Exchange suspended trading of Nisshin Steel
Co and Nippon Metal Industry Co after the
Nikkei newspaper reported that the two companies were in talks
to merge their operations to become Japan's No.2 stainless steel
maker after Nippon Steel Corp.
Both companies later denied the report.
Nisshin Steel rose 5.5 percent to 116 yen, and Nippon Metal
Industry jumped 13 percent to 78 yen ahead of the suspension.
Tosoh Corp, an integrated chemicals maker, fell 4.4
percent to 219 yen after a fire broke out at its vinyl chloride
monomer plant in Yamaguchi prefecture, southern Japan, forcing
the company to cut its output in Japan by 30 percent.

Sony Corp rose 1.4 percent to 1,373 yen after a
group led by the company won the auction for record label EMI's
music publishing operations in a deal valued at $2.2 billion on
Friday.