REFILE-Nikkei falls almost 1 pct; seen mired in recent ranges

* Olympus up more than 15 pct as delisting fears fade
* Elpida surges on DRAM output report, MSCI relief
* Nikkei could test Oct. 5 low of 8,343 - strategist

By Mari Saito
TOKYO, Nov 16 (Reuters) - The Nikkei stock average
lost nearly 1 percent in thin trade on Wednesday but stayed in
recent ranges as investors remained on edge about developments
in the euro zone debt crisis.
Olympus Corp jumped more than 15 percent
as investors bought back its shares on hopes that the Tokyo
bourse will not delist the scandal-hit company, while Elpida
Memory Inc surged after a report that it will cut DRAM
production to support prices.
Rising yields in European debt markets overnight suggested
the region's woes are not over yet. The spreads of French,
Belgian and Austrian 10-year bond yields over German Bunds all
hit their highest levels since the euro's launch in 1999, while
the equivalent Dutch spread hit its widest since early 2009.
Further fanning contagion fears, yields on Italian 10-year
bonds climbed back above the key 7 percent level,
widely deemed unsustainable, and Spanish borrowing costs rose
ahead of the launch of a new 10-year bond on Thursday.
"All the short-term positives have disappeared," said Fujio
Ando, senior managing director of Chibagin Asset Management.
Toshiyuki Kanayama, senior market analyst for Monex Inc,
said market participants were wary of the Oct. 5 low of 8,343,
but hope that as long as the Nikkei does not drop near the level
seen in March 15 at 8,227.63 there is still an opportunity for a
rebound.
The Nikkei share average closed down 0.9 percent at
8,463.16. The broader Topix index also shed 0.9 percent,
to 724.11.
Declining shares outpaced advancers, with almost five times
as many shares declining as advancing.
Volume was thin, with 1.35 billion shares changing hands on
the main board, slightly up from Tuesday's 1.23 billion shares,
but still well below last week's average volume of 1.74 billion.
The Nikkei had been in the process of forming an inverse
head-and-shoulders pattern with the Oct. 5 level as the bottom,
Nomura research analyst Shoichiro Yamauchi wrote in a recent
report.
But as the benchmark has failed to break above the 8,600
level where the two shoulders would need to be positioned, the
pattern may have broken down, meaning the Nikkei could test the
Oct. 5 low and form a double bottom with that low, he said.
Similarly, the S&P 500 is flat for the year and
trapped in a tight range, and U.S. strategists say it could find
tough technical resistance to a continued rise on Wednesday.
"The S&P is also in a range, and because the Nikkei often
tracks that index, that is another factor weighing on the Nikkei
from a technical point of view," said Yutaka Miura, senior
technical analyst at Mizuho Securities.
The Topix securities subindex led losses on
Wednesday, skidding 3.9 percent, as thin trading volumes and
lacklustre share prices pose risks to brokerages' balance
sheets.
Nomura Holdings fell 4.4 percent to 242 yen and
Daiwa Securities Group tumbled 4.6 percent to 248 yen.

OLYMPUS VAULTS, TOPS MAIN BOARD BY TURNOVER
Shares of scandal-hit Olympus gained 15.6 percent to 740 yen
and settled up by their daily limit. The issue was the heaviest
traded by turnover amid fading expectations that the company
would be delisted by the Tokyo Stock Exchange.
"As long as market participants think that Olympus
will not be delisted, the stock will continue to rise. The
market is buying back what they sold last week," said Mitsushige
Akino, chief fund manager at Ichiyoshi Investment Management.
Investors were expecting the stock to continue its climb as
long as the company's successful endoscope business remains
unscathed from the scandal, he said.
In an internal memo, Olympus President Shuichi Takayama told
employees that he is prepared to take firm legal action against
company executives and officials responsible for the
scandal.
Elpida Memory Inc added 8.8 percent to 359 yen after
tumbling 9.1 percent on Tuesday, after the Nikkei business daily
reported that Japan's biggest DRAM maker is considering further
production cuts to prop up sagging prices.
Elpida was sold heavily on Tuesday as some expected the
chipmaker to be removed from the MSCI's Japan index, a trader
said, but regained losses after it remained on the list.
MSCI said late on Tuesday it would drop Mitsui Engineering
and Shipbuilding Co, which shed 3.4 percent to 114 yen,
as well as Minebea Co, which fell 2 percent to 298 yen.
MSCI said it would add Sanrio Co, which fell 0.7
percent to 4,060 yen. The changes will take effect as of the
close on Nov. 30.
Kyowa Hakko Kirin added 0.5 percent to 929 yen
after it announced it will form a new business alliance with
Fujifilm Holdings to develop cancer
drugs.
Shares of Nisshin Steel Co gained 2.8 percent to
111 yen and Nippon Metal Industry Co added 2.7 percent
to 71 yen after the two companies announced on Tuesday they
would merge by October next year.