Nikkei ends up, buoyed by surge in China market

* Nikkei rises 0.5 pct; Topix gains 0.4 pct
* Gree, DeNA suffer from spectre of NTT DoCoMo competition
* Japan fund managers' stock allocation at 14-yr low in Sept
-poll
* Nikkei down 0.6 pct so far this quarter

By Dominic Lau
TOKYO, Sept 27 (Reuters) - Japan's Nikkei average rose on
Thursday, rebounding from the previous session's sharp fall, as
a surge in Chinese stocks lifted sentiment in the region,
countering concerns over the euro zone crisis after
anti-austerity protests in Spain.
China's Shanghai Composite jumped as much as 3.2
percent in the afternoon session with traders citing speculation
that authorities will take steps to prop up the stock markets,
which have been dragged down by concerns over a sharp slowdown
in the world's second-largest economy.
An injection of 180 billion yuan ($28.56 billion) by the
Chinese central bank to ease liquidity strains ahead of a
week-long holiday also boosted sentiment there.
The Nikkei ended 0.5 percent higher at 8,949.87
after sagging 2 percent on Wednesday as a mass of companies went
ex-dividend.
"We are hearing chatter that China's securities regulatory
commission asked mutual funds to stabilise the market before
(the Communist Party's congress) in October," a senior dealer at
a foreign bank said.
Japanese firms with heavy exposure to China, Japan's biggest
export market, gained from the bounce in the Chinese market.
Construction machinery maker Komatsu Ltd rose 2.3
percent and industrial robot maker Fanuc Corp added 0.6
percent, after falling as much as 1.2 percent earlier in the
day.
But social gaming companies Gree Inc and DeNA Co
Ltd slumped after the Nikkei newspaper said mobile
operator NTT DoCoMo Inc planned to launch a competing
social gaming network on mobile devices in November.
DeNA, the most-traded stock on the main board by turnover,
sank 9.2 percent, while Gree plunged 12.3 percent and was the
second most-traded stock. NTT DoCoMo added 0.3 percent.
The broader Topix index added 0.4 percent to 745.59,
with 1.63 billion shares changing hands, up from Wednesday's
1.46 billion but down from last week's average of 1.85 billion.

CHINA VS EURO ZONE
The market was moving in and out of positive territory
earlier in the session as concerns over the situation in Spain
tempered short-covering of some oversold shares.
Violent protests in Madrid against expected austerity
measures and talk of Catalonia's secession increased the
pressure on Spanish Prime Minister Mariano Rajoy as he moves
closer to requesting rescue funds.
"The ECB's plan to buy bonds was an excellent one but it
will be completely meaningless if they don't carry it out," said
Masayuki Doshida, senior market analyst at Rakuten Securities.
"Even worse would be if they started to buy Spanish debt and
then stopped because Spain had failed to fulfill the conditions,
which would cause havoc."
The European Central Bank's announcement of its bond
purchasing plan earlier in September was a boon for European
stocks, with the STOXX Europe 600 index ahead of the
Nikkei with a 1.7 percent gain on the month against the Nikkei's
1.2 percent. The Nikkei is down 0.6 percent for the quarter,
which ends on Friday.
That is partly due to a persistently strong yen, which
erodes exporters' revenues garnered abroad once repatriated and
makes them less competitive. The yen was traded at 77.715
yen to the dollar on Thursday.
A survey of 10 Japan-based fund managers showed they ramped
up their bond allocations to a record high and chopped those for
equities to a fresh 14-year low as they remained unconvinced a
stimulus drive by the ECB, the U.S. Federal Reserve and the Bank
of Japan will counter a global slowdown.
"Negative headlines from Europe seem to be driving daily
sentiment more than fears than about the dispute with China,"
said Trevor Hill, head of Japanese equities at UBS Securities.
"The market will potentially move higher if Europe can
regain positive momentum in the headlines. The downside risk
will come from a significant deterioration in the dialogue with
China."