Nikkei rebounds 0.8 pct but earnings worry weighs
* Nikkei rises 0.8 pct after near 5 pct drop the previous day
* Fujitsu, Toshiba jump on possible HDD business deal
* Worry about corporate earnings, economy weighs on market (Adds stocks, details)
By Aiko Hayashi
TOKYO, Jan 14 (Reuters) - The Nikkei average rose 0.8 percent on Wednesday as exporters such as Sony Corp (6758.T) rebounded after a sharp sell-off the previous day, but concerns about upcoming earnings results and a deep economic downturn weighed on investor confidence.
Fujitsu Ltd (6702.T) and Toshiba Corp (6502.T) both jumped nearly 6 percent after Toshiba said it was in talks to buy Fujitsu's hard-disk drive business, sparking hopes for a realignment in the sector. [ID:nT161757]
"Investor inclination to sell into rallies hasn't changed due to continuing worries about the economy and corporate earnings that have been hit by a strong yen," said Yukio Takahashi, a market analyst at Shinko Securities.
"Investors fear further cuts in corporate earnings forecasts after Sony and Toshiba."
The Nikkei .N225 added 68.11 points to 8,482.02, after moving in and out of negative territory during early trade.
Earlier this month, the benchmark logged its first seven-day winning streak in nearly three years, gaining 8.5 percent during the period.
The broader Topix gained 1.4 percent to 825.41.
On Tuesday, shares of Sony and Toshiba tumbled after a source said Sony may post its first operating loss in 14 years and media reported Toshiba was also headed for a big loss. That helped push the benchmark Nikkei down 4.8 percent to its lowest close in a month.
The dollar was trading around 89.30 yen JPY=, above a three-week low and near December's 13-½ year trough just above 87 yen.
Investors fret over a stronger yen as it eats into exporters' overseas profits when repatriated.
"Among possible downward forecast revisions, the market will closely watch how many companies predict their earnings will turn into the red this business year," said Masayoshi Okamoto, head of dealing at Jujiya Securities.
"If companies were to also cut their dividend payment forecasts, that would further diminish the appeal of Japanese stocks."
EXPORTERS REBOUND
Fujitsu advanced 5.6 percent to 416 yen, while shares of Toshiba climbed 5.7 percent to 407 yen. The Nikkei business daily earlier reported the deal would likely be worth 30-40 billion yen ($335-$447 million).
Exporters gained after sharp losses the previous day, with Sony jumping 5.5 percent to 2,110 yen and Toyota Motor Corp (7203.T) gaining 2.4 percent to 2,945 yen.
Nissan Motor (7201.T) rose 4.5 percent to 328 yen as Reuters reported that Chrysler was in talks to sell key assets to Nissan-Renault and auto supplier Magna. [ID:nN13428466]
Nippon Yusen (9101.T) and other shipping firms, battered last year amid the slowing global economy, climbed after key freight indexes extended gains on Tuesday. .BADI .BACI
Nippon Yusen climbed 4.3 percent to 555 yen and Mitsui O.S.K. Lines (9104.T) gained 4.3 percent to 608 yen.
Among decliners, property firms slid after Japanese real estate investment firm Creed Corp 8888.T filed for court protection from creditors, deepening concerns about a sharp downturn in the property market.
Mitsubishi Estate (8802.T) slid 2.3 percent to 1,261 yen and Mitsui Fudosan Co (8801.T) shed 1.9 percent to 1,270 yen.
Dentsu Inc (4324.T) lost 3.1 percent to 1,597 yen after Nikko Citigroup cut its rating on Japan's largest advertising firm to "sell/medium risk" from "hold/medium risk", warning the industry slump could continue into the business year to March 2011.
Trade was light on the Tokyo exchange's first section, with 887 million shares changing hands, compared with last week's morning average of 1.1 billion.
Advancing stocks outnumbered declining ones by more than 2 to 1. (Reporting by Aiko Hayashi; Editing by Chris Gallagher)
