Japan's Nikkei up 1.8 pct as financial worries ease

* Nikkei rebounds from 3-month closing low the previous day

* Banks gain on easing financial worries

* Stronger-than-expected data boosts machinery stocks (Adds stocks, details)

By Aiko Hayashi

TOKYO, July 9 (Reuters) - The Nikkei stock average rose 1.8 percent on Wednesday, rebounding from a three-month closing low the previous day, as financial shares such as Mitsubishi UFJ Financial Group (8306.T) jumped after comments from the U.S. Federal Reserve helped eased credit worries.

Komatsu Ltd (6301.T) and other machinery stocks powered higher after Japan's May core machinery orders largely beat economists' consensus. [ID:nTKU003403]

"A sense of relief has spread after Bernanke said he would continue to supply funds, though that's not really surprising," said Masaru Hamasaki, senior strategist at Toyota Asset Management.

"Still, it's hard for the market to gain further as the health of real economies is not good. The trading pattern of a sell-off and a rebound will probably continue for a while."

The benchmark Nikkei .N225 gained 237.17 points to end the morning session at 13,270.27. It slid 2.5 percent on Tuesday to book its lowest close since April 15.

The broader Topix advanced 1.9 percent to 1,307.70.

Fed Chairman Ben Bernanke said in a speech the U.S. central bank may extend emergency lending facilities for big Wall Street banks past the year-end, showing the Fed is determined to stop the housing-inspired credit crisis from wreaking further havoc on the economy. [ID:nN08304308]

Kazuhiro Takahashi, general manager of the equity marketing department at Daiwa Securities SMBC, said uncertainty still remains in the market and a rebound looks limited.

"Machinery orders data is volatile, the financial sector is still full of uncertainty ahead of their earnings announcements and oil prices have a track record of falling but returning to a upward trend," he said.

BANKS FAVOURED

Mitsubishi UFJ Financial Group, Japan's biggest bank, shot up 4.7 percent to 978 yen, while No.2 Mizuho Financial Group (8411.T) jumped 5.7 percent to 521,000 yen and Sumitomo Mitsui Financial Group (8316.T), the third-biggest bank, gained 5.1 percent to 810,000 yen.

Nomura Holdings (8604.T), Japan's largest brokerage, climbed 3.1 percent to 1,550 yen.

Shares of Komatsu, the world's No.2 maker of earth-moving equipment, rose 2.7 percent to 2,830 yen and industrial robot maker Fanuc Ltd (6954.T) gained 3 percent to 9,750 yen.

Japan's core machinery orders rose a faster-than-expected 10.4 percent in May, easing worries that Japanese firms will trim capital spending to deal with rising energy and raw material costs.

On the downside, oil and gas field developer Inpex Holdings Inc (1605.T) slid 3.2 percent to 1.23 million yen after U.S. crude oil futures sharply fell on Tuesday on pressure from a stronger dollar and forecasts that eased worries about Hurricane Bertha hitting oil facilities. [O/N]

Trade picked up on the Tokyo exchange's first section, with 915 million shares changing hands, above last week's morning average of 900 million.

Advancing stocks outpaced declining ones by a ratio of more than 5 to 1. (Editing by Brent Kininmont)