Nikkei edges up, exporters gain on weaker yen

*Nikkei claws higher as exporters rise on weaker yen

*Surge in key freight index powers shippers higher

*Short-covering dominates amid gloom over longer term (Adds stocks, details)

By Elaine Lies

TOKYO, Aug 15 (Reuters) - Japan's Nikkei stock average climbed 0.1 percent on Friday as Canon Inc (7751.T) and other exporters advanced thanks to a slightly weaker yen and a rise in U.S. shares sparked partly by lower oil prices. Shippers steamed higher following sharp gains in a key freight index, while Mizuho Financial Group (8411.T) clawed up after it and other banks were mauled earlier this week. Market players said short-covering after recent slides dominated amid holiday-thinned trade and added that the longer-term outlook was grim.

"Japan's consumption is bad, exports to Europe and the United States aren't good, and it seems that the situation in China is likely to get tougher too," said Masayoshi Okamoto, head of dealing at Jujiya Securities.

"In particular, the euro's recent losses will make exports to the region especially tough."

Japanese manufacturers' sentiment sank to a fresh five-year low in August, a Reuters poll showed, suggesting the closely watched Bank of Japan tankan will show further pessimism amid growing signs of a recession. [ID:nT178007]

The manufacturers index in the Reuters Tankan survey, a monthly poll of Japanese firms that tracks the central bank's quarterly tankan, tumbled to minus 16 in August from minus 10 in July -- to hit its lowest point since March 2003. [ID:nT145587]

"The trend for stocks is downward, with the global economy definitely slowing," said Takahiko Murai, general manager of equities at Nozomi Securities.

Exporters were one of the brightest spot on the Tokyo bourse, buoyed as the dollar rose over 110 yen JPY=. By midday it was fetching 110.06 yen, helping to keep the Nikkei solid.

The benchmark Nikkei .N225 edged up 13.37 points to 12,970.17, while the broader Topix gained 0.1 percent to 1,239.66.

SHIPPERS SAIL HIGHER

Shippers forged upwards after the Baltic Dry Index .BADI surged 4.6 percent on Thursday -- a second straight day of gains for the index after a slide that had begun in early July. Mitsui O.S.K. Lines (9104.T) gained 2.1 percent to 1,314 yen and Kawasaki Kisen Kaisha Ltd (9107.T) climbed 4.2 percent to 803 yen. Nippon Yusen KK (9101.T), Japan's largest shipping firm, added 2.3 percent to 893 yen.

The gains helped the shipping sub-index .ISHIP.T climb 2.2 percent to become the second-biggest gainer among the sub-indices.

But the Nikkei's biggest boost by volume weight came from exporters, led by Tokyo Electron (8035.T) with a gain of 3.1 percent to 6,320 yen and followed by Canon, which rose 1.9 percent to 5,260 yen.

Sony Corp (6758.T) climbed 1.7 percent to 4,220 yen and Toyota Motor Co (7203.T) rose by 1.2 percent to 4,940 yen.

Higher oil prices pushed trading houses lower, with top trader Mitsubishi Corp (8058.T) losing 1.8 percent to 2,805 yen and Mitsui & Co (8031.T) down 1.7 percent to 1,779 yen. Itochu Corp (8001.T) lost 2 percent to 882 yen. Oil CLc1 fell below $114 a barrel as a contraction in the euro zone underscored the threat to global oil demand growth [O/R] [ID:nLE725248], sending trading houses lower.

Large banks, many of which gained in early trade, pared gains, with Mizuho Financial Group emerging the strongest by midday with a rise of 0.4 percent to 461,000 yen.

Sumitomo Mitsui Financial Group (8316.T) was flat while top lender Mitsubishi UFJ Financial Group (8306.T), in the midst of a bid for full control of a Californian bank, lost 0.9 percent to 813 yen. [ID:nT172438]

Trade was light on the Tokyo exchange's first section, with 882 million shares changing hands, compared with last week's morning average of 1 billion. Advancing stocks beat declining ones by 866 to 672. (Reporting by Elaine Lies; Editing by Edwina Gibbs)