* Nikkei rises 1.9 pct, Topix up 1.7 pct in active trade * Nikkei still holds below Ichimoku cloud in bearish sign * Volatility remains elevated By Dominic Lau TOKYO, June 14 Japan's Nikkei average jumped 1.9 percent on Friday, recovering some of the previous session's sharp fall, as robust data eased concerns over whether the U.S. economy can withstand a pullback in stimulus by the Federal Reserve. "People are unwinding (short) positions, or people are trying to buy on dips. The market did rebound and the U.S. did well so people are buying on the back of that," a senior dealer at a foreign bank said. U.S. stocks rallied overnight after retail sales rose more than expected in May and first-time applications for unemployment benefits fell last week, in signs of economic resilience. The senior dealer said buy orders outpaced sell orders by three to one and there was a good balance between long-only investors and hedge funds, although long-only players were a bit more active. "For the time being, the Nikkei is trying to find itself where it should be after the crazy opening," he said, referring to Nikkei June futures and options contracts settlement, known as "special quotation". The Nikkei was up 238.31 points at 12,683.69 after trading as high as 12,889.46, though it was still holding below the Ichimoku cloud in a bearish sign. On Thursday, the Nikkei tumbled 6.4 percent to its lowest close since April 3, the day before the Bank of Japan unveiled sweeping stimulus to revive the economy, and below the Ichimoku cloud for the first time since mid-November. It also took the slide from a 5-1/2-year peak hit on May 23 to nearly 22 percent, slumping into a bear market and wiping about $700 billion off the Nikkei's market capitalisation. Over the past three weeks, trading in the Nikkei has been volatile. The 30-day implied volatility for the benchmark jumped to 42.3 percent on Thursday, its highest since March 2011 earthquake and tsunami, according to Thomson Reuters Datastream. Investors, mainly hedge funds, have been cutting their long Japanese equities and short yen positions on concerns that the Fed will roll back its stimulus and after the Nikkei had rallied more than 80 percent from mid-November to that multi-year high. Beaten-down real estate companies were in demand on Friday, up 4.2 percent, while securities firms rose 2.4 percent, with Nomura Holdings, Japan's top brokerage, up 2.2 percent. The broader Topix index was up 1.7 percent at 1,062.25 by mid-morning, with volume at 43 percent of its full daily average for the past 90 trading days. The sell-off has taken Japanese equities' valuations, measured by the 12-month forward price-to-earnings, to 14.1 from a three-year high to 16.3 touched two weeks ago, Datastream showed.