Nikkei up 1.2 pct, regains semblance of stability as volatility ebbs
* Nikkei reverses early losses to end 1.2 pct higher * Big name exporters rebound as yen drops * Volatility eases somewhat * Foreign investors bullish about Japanese equities' outlook - Nomura By Ayai Tomisawa TOKYO, May 28 (Reuters) - Japan's Nikkei share average rose on Tuesday, with investors picking up recently battered stocks as the market regained a degree of stability after the extreme volatility of the past few days. The Nikkei gained 169.33 points to 14,311.98, after dropping as much as 1.4 percent to below 14,000 at the open which came on top of Monday's 3.2 percent slump. Market participants said the turbulence caused by high frequency programme trade on futures seemed to be over, but sentiment remained fragile after last week's dive raised doubts about the sustainability of the remarkable bull-run that has taken the index to a 5-1/2-year high. The Nikkei plunged 7.3 percent last Thursday, its biggest single-day percentage loss since the March 2011 earthquake and tsunami. The selloff was triggered by worries the U.S. Federal Reserve will scale back its stimulus this year and weak factory activity data from China, Japan's second-biggest export market. The index lost 3.5 percent last week, the biggest weekly decline since October. Still, investor appetite for Japanese equities remained intact, underpinned by sweeping government and central bank efforts to pull the world's third-largest economy from its two-decade long funk, analysts said. "Japanese stocks' fundamentals have not changed, and sentiment in the long-term on Abenomics is intact," said Naoki Fujiwara, a fund manager at Shinkin Asset Management. Even after the recent selloff, the benchmark Nikkei is up 38 percent this year, and has gained more than 15 percent since April 4, when the Bank of Japan announced a sweeping monetary expansion campaign to beat back years of deflation and revive growth. The broader Topix index added 1.2 percent to 1,168.27. The recent gyrations in the market were exacerbated by a rebound in the yen in the past few sessions, driven by safe-haven bids and as some investors pared back their yen-selling positions to cover losses in equities. On Tuesday, the yen pulled back, with the dollar rising 1.0 percent to 101.95 yen, up more than a full yen from two-a week low of 100.66 hit on Friday. The yen's drop helped some of the exporters. Blue-chip Toyota Motor Corp advanced 4.9 percent and was the second-most traded on the main board by turnover, while peers Mazda Motor Corp rose 6.5 percent and Mitsubishi Motors Corp jumped 14 percent. Sony Corp, which was also heavily traded, gained 3.2 percent. Industrials also outperformed. Toshiba Machine Co gained 5.1 percent, SMC Corp added 4.3 percent and Mori Seiki Co advanced 7.8 percent. Hiromichi Tamura, chief strategist at Nomura Securities, said that most of the institutional investors his team met in Europe and the United States last week were bullish about the outlook for Japanese equities, compared with the previous time the team met in January. "Most of the investors we met in January were bearish on the outlook. This time, several investors we met thought our forecast for the Nikkei to reach 16,000 by end-2013 was overly conservative," Tamura wrote in the note.