Nikkei crawls higher as JFE gains, but banks fall

(Updates to midmorning)

TOKYO, April 9 (Reuters) - Japan's Nikkei edged up 0.2 percent on Wednesday, buoyed by gains in steel maker JFE Holdings Inc's (5411.T) announcement of a foreign joint venture, but rises were limited as banks slid on lingering credit concerns.

Funai Electric Co Ltd (6839.OS) surged 10.2 percent after Philips Electronics (PHG.AS) said it would transfer its struggling North American television business to the Japanese electronics maker. [ID:nL08832352]

U.S. stocks were lower on Tuesday after savings and loan company Washington Mutual Inc WM.N said it expects a first-quarter net loss of more than $1 billion and is cutting its dividend, dimming optimism that the worst of the credit crisis is over.

"This has been a bit of a reality check, with recent gains based entirely on hopes that the worst of the subprime crisis was over," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.

"We're seeing some rises here mainly from the dollar stabilising against the yen, and there's no aggressive selling. But there's no real reason to buy, either."

The benchmark Nikkei .N225 gained 25.81 points to 13,276.24, but the broader TOPIX slid by 0.4 percent as financials were sold.

Japan's No 3 bank, Sumitomo Mitsui Financial Group (8316.T) slipped 1.6 percent to 733,000 yen, while top lender Mitsubishi UFJ Financial Group (8306.T), dipped 1 percent to 958 yen. Nomura Holdings Inc (8604.T), the country's largest securities firm, slid 1.4 percent to 1,591 yen.

JFE Holdings Inc said on Tuesday it would join a blast furnace joint venture between South Korean peer Dongkuk (001230.KS) and Brazilian mining firm Vale (VALE5.SA) [ID:nT168963].

JFE, the world's third-largest steel maker, said in a statement that the three would start a feasibility study on constructing blast furnaces and a plant capable of producing 5-6 million tonnes-a-year of steel slab in Brazil's northeastern Ceara state.

JFE was up 3.2 percent at 4,520 yen. (Reporting by Elaine Lies, editing by Jacqueline Wong)