* KDDI gains in heavy trade in spite of weak earnings * Nintendo cuts f'cast, but stock's fall softened by new Wii hopes * Soft yen and hopes of easing support the market By Sophie Knight TOKYO, Oct 25 Japanese shares rose on Thursday morning as a weaker yen buoyed exporters and expectations of further monetary easing by the Bank of Japan offset the impact of cuts in guidance from Nintendo Co Ltd and other firms. KDDI Corp was the most-traded share by turnover, rising 5.1 p ercent t o a one-year high, in spite of logging a first-half drop in operating profit, with analysts noting that the mobile operator seemed confident of two-digit operating profit growth in the next business year. The Nikkei added 0.6 percent to 9,007.88 by the midday break, reclaiming a foothold above the psychologically key 9,000 level after snapping a seven-day winning streak on Wednesday. "There are lots of companies whose downward revisions were much wider than expectations," said Yasuo Sakuma, portfolio manager at Bayview Asset Management. "But it's a tug-of-war between poor corporate earnings and the softer yen." A more attractive exchange rate helped even firms that slashed their outlook to advance, including electric motor maker Nidec Corp, which shot up 6.9 percent despite cutting its annual operating profit forecast by 16 percent. Yutaka Miura, senior technical analyst at Mizuho Securities, said the yen was likely to remain soft on heightened risk appetite ahead of the Bank of Japan's policy meeting on Oct. 30, when the bank is expected to increase its asset-buying scheme. "However, as more easing has already been priced into the currency and equity markets, it's more likely that shares will drop after the BOJ's decision," Miura said. "At the moment the soft yen is shielding Japanese shares from the recent weakness in U.S. equity markets, but that will change if the currency appreciates." Earnings season in the United States has so far been a rather damp affair, with technology firms pulling the biggest disappointments and just 38.2 percent of S&P 500 companies that have reported so far beating analyst expectations, below the 62 percent average for past quarters. By comparison, nine out of the 12 Nikkei companies that have reported earnings so far have undershot expectations, with some analysts fearing the worst is yet to come from exporters saddled with a strong yen that erodes overseas revenue when repatriated. Some firms have managed to buck that trend. Mitsubishi Motor Corp hiked its operating profit estimate for the six months to Sept. 30 by 3 percent to 30.8 billion yen, thanks to cost-cutting efforts, helping the stock rise 4.4 pe r cent. BETTER THAN EXPECTED? Market participants' reactions to guidance cuts and profit warnings have been surprisingly moderate given their severity, according to Miura of Mizuho Securities. For example, Sharp Corp, whose share price had lost 75 percent for the year to date through Wednesday, sagged 4.8 p e rcent after the Nikkei business daily said the company is likely to log a first-half loss of around $5 billion, almost double that projected in August, due to restructuring costs. Nintendo's stock also dropped just 0.8 percent after the videogames maker cut its annual profit outlook to 20 billion yen ($251 million) from the 35 billion yen forecast in July. Investors are now hoping that its new Wii console will spur growth. "There are much fewer people holding Nintendo's stock compared to a year ago, hardly any institutional investors," said Sakuma of Bayview Asset Management. "The share price was even going up for a while this morning -- it's as if people don't really care what the stock does." In contrast, Yahoo Japan Corp sagged 4.9 percent even after its second-quarter operating profit came in at 43.3 billion yen, safely within its guidance range, as investors fretted over falling advertising revenue in the near future. "We see a need for a slightly cautious stance toward H2 earnings now that ad demand has weakened across the board," Nomura Securities said in a note, though it maintained its "neutral" rating for the stock. The broader Topix advanced 0.5 percent to 747.17 by the midday break in moderate trade, with volume at 45.8 percent of its full-day 90-day average.