Japan stocks bounce back, subprime snub lifts banks

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By Taiga Uranaka

TOKYO, Dec 20 (Reuters) - Japanese stocks bounced back on Thursday after a six-day losing streak, with bank shares including Mitsubishi UFJ Financial Group (8306.T: Quote, Profile, Research, Stock Buzz) up on news they will refuse to pay into a U.S.-led subprime rescue fund.

Still, with high volatility in thin trade and a lack of powerful market-moving factors, shares struggled to rise and some participants said the market could go in either direction led by very short-term trades.

"If positive expectations exist here, they are only expectations for a rebound. But these alone cannot put the market on a solid footing," said Tomomi Yamashita, a fund manager at Shinkin Asset Management.

"Concerns about the subprime problems and the economic outlook are overwhelming the kind of expectations that create an upward trend."

At the same time, falls are seen limited, as bargain hunting by long-term investors such as pension funds is expected at around 15,000 on the Nikkei average .N225.

The benchmark Nikkei ended the morning session up 0.7 percent at 15,139.01 and the broader TOPIX index gained 0.7 percent to 1,466.89.

Trade was thin, with 793 million shares changing hands on the Tokyo bourse's first section compared with last week's morning average of 1 billion.