Nikkei up 0.1% on exporters but trading firms weigh

(Updates to midmorning)

TOKYO, May 28 (Reuters) - Japan's Nikkei stock average edged up 0.1 percent on Wednesday, supported by high-tech exporters such as Canon Inc (7751.T) on a softer yen and after a sharp drop in oil prices boosted investor confidence about consumer and business spending on Wall Street.

But oil's fall from record highs undermined commodity-linked shares such as trading firm Mitsubishi Corp (8058.T), with crude slipping $4 to $128 a barrel on Tuesday.

"A fall in oil prices is bad news for trading houses and resource-related stocks, but stabilising oil prices are positive for the overall market," saidKoichi Ogawa, chief portfolio manager at Daiwa SB Investments.

"Still, the Japanese market is in a consolidation stage in the short-term."

As of 0046 GMT, the benchmark Nikkei average .N225 rose 19.28 points to 13,912.59. It has gained nearly 20 percent since a year-low hit in mid-March.

The broader Topix index was up 0.04 percent or 0.49 points at 1,368.74.

Oki Electric Industry Co (6703.T) shot up 8.1 percent to 227 yen after the Nikkei business daily said that Rohm Co (6963.OS) plans to buy the semiconductor operations of Oki for about 100 billion yen ($959 million). Rohm rose 0.2 percent to 6,620 yen.

The deal would create Japan's seventh-largest semiconductor maker in terms of sales and mark the first major realignment in Japan's chip industry since Hitachi Ltd (6501.T) and Mitsubishi Electric Corp (6503.T) merged their system chip operations in 2003, the Nikkei newspaper said. [ID:nT192169]

The dollar steadied against the Japanese currency at 104.26 yen JPY=. Investors had fretted over a stronger yen as it dents exporters' overseas profits when they are brought back home.

Shares of Canon rose 0.9 percent to 5,420 yen and Advantest Corp (6857.T) climbed 1.9 percent to 2,635 yen.

Mitsubishi Corp lost 2.4 percent to 3,660 yen and Sumitomo Corp (8053.T) declined 2.2 percent to 1,541 yen, given that Japan's top trading firms invest heavily in overseas oil fields and mines.

Nippon Oil (5001.T), Japan's largest oil distributor, shed 2.7 percent to 767 yen and oil explorer Inpex Holdings (1605.T) lost 3.8 percent to 1.26 million yen. (Reporting by Aiko Hayashi, Editing by Brent Kininmont)