Nikkei gains on Europe deal; stops short of 75-day avg

* Nikkei up, but 75-day average seen as resistance
* Worries over European debt crisis remain
* Investors eye China policy meeting, FOMC
* Olympus hits 6-week high, says will meet earnings deadline

By Hideyuki Sano
TOKYO, Dec 12 (Reuters) - The Nikkei average gained on
Monday after European leaders agreed to draft a new treaty for
deeper economic integration, but market players said the
short-covering bounce may not last as the deal was no panacea
for the region's long-term debt worries.
The Nikkei closed just below its 75-day moving average and
trading volume was thin, in a sign investors were still not
confident that the worst for the debt crisis is over in Europe.
"Europe is about one month behind the schedule they
announced in October, in terms of putting the bailout fund to
work and reinforcing banks capital. The European crisis will
continue to be a burden on the market," said Mamoru Suzuki,
chief economist at Mizuho Research & Consulting.
European leaders agreed last week to pursue a tougher budget
pact with automatic sanctions in the currency bloc but investors
remain nervous as a new treaty could take three months to
negotiate and may require loseable referendums in some
countries.
"Yes, they agreed on a budget pact, but it has no binding
powers and there is no treaty yet...They have brought forward
the European Stability Mechanism to next year but it has no
banking license. I do not see why stocks are rising on this,"
said Seiki Orimi, senior investment strategist at Mitsubishi UFJ
Morgan Stanley Securities.
The benchmark Nikkei gained 1.4 percent to 8,653.82,
just below its 75-day average near 8,660, seen as a key
resistance level. Further resistance looms at the bottom of the
Ichimoku cloud at 8,747.70.
The broader Topix index added 1.2 percent to 746.69.

CHINA, U.S.
"One big question now is how the European debt crisis will
affect the Chinese economy. It is worrying that Chinese shares
are still falling despite China's monetary easing," said Kiyoshi
Noda, chief fund manager at MU Investments.
Shanghai shares slipped to a 2-1/2 year low on
Monday, which makes a three-day summit on economic priorities
convened by Chinese leaders ending on Wednesday all the more
important.
Market players are looking for signs of further policy
easing after the Chinese central bank made an
earlier-than-expected move last month to cut banks' required
reserves amid worries China could be bruised by problems in
Europe, its biggest export market.
"The market will have some support from expectations of
monetary easing around the world," Mizuho Research's Suzuki
added.
The U.S. Federal Reserve is expected to adopt more easing
next year, though it looks set to hold off on easing monetary
policy at its next policy meeting on Tuesday.
Shares of scandal-hit Olympus jumped 7.8 percent to
1,300 yen, their highest in more than six weeks, after the
company said it was preparing to file its July-September
earnings by Wednesday, a necessary step to remain listed.
Toyota Motor Corp dropped 0.7 percent to 2,617 yen
after the company cut its annual profit outlook by more than
half due to the strong yen and floods in Thailand.

About 1.51 billion shares changed hand on the Tokyo Stock
Exchange's main board, 5 percent less than the average of the
past 20 days. There were 1,272 advancing issues versus 289
decliners.