UPDATE 1-Japan property stocks jump on Zecs capital injection

(Adds details, updates stock prices)

By Aiko Hayashi

TOKYO, Aug 25 (Reuters) - Shares of midsized Japanese property firms jumped on Monday after real estate company Zecs Co (8913.T) said it would receive a capital injection from an investment fund, sparking hopes of further inflows to help the beaten-down sector.

The industry has seen a string of failures recently as banks tighten credit to small and medium-sized developers, which are struggling amid soaring costs and weak sales of apartments as the world's second-largest economy slows.

Zecs shares closed up 14 percent at 8,160 yen after it said it would sell about 1.5 billion yen ($13.6 million) worth of its preferred shares to Japanese fund J-Will Partners by the end of this month.

But even after Monday's gain, Zecs shares are down about 90 percent over the past three months.

"It's probably about time investors come to property firms through actions like capital injections, with the mid- to long-term view that their shares have plunged too far and may have nearly bottomed," said Hitoshi Yamamoto, chief executive officer of Fortis Asset Management Japan.

"Still, a rebound (in property shares) won't happen overnight and financial institutions are not likely to change their stance."

Among similar stocks, apartment developer Joint Co (8874.T) shot up 13.3 percent to 256 yen, while Creed Corp 8888.T surged 11.7 percent to 113,900 yen.

The Tokyo Stock Exchange's real estate sector index .IRLTY.T rose 2.1 percent, outperforming a 1.7 percent rise for the benchmark Nikkei average .N225, although it is still down 21 percent for the year to date.

The Tokyo bourse's REIT index .TREIT, added 1.9 percent but remains down 33 percent for the year to date.

Investors had dumped the sector in the wake of developer Urban Corp's 8868.T failure this month, the biggest collapse of a listed Japanese company in six years, and the failures before that of fellow developers Suruga Corp and Zephyr Co.

The sector's troubles have also spurred moves to consolidate with apartment developers Azel 1872.T and Gro-Bels (3528.T) announcing last week that they would merge in January to better compete amid high construction materials prices and sluggish demand.

Azel shares added 1.6 percent to 64 yen and Gro-Bels jumped 5.7 percent to 56 yen. (Reporting by Aiko Hayashi; Editing by Edwina Gibbs)