* Nikkei +0.1 pct, Topix +0.1 pct * Nikkei still -9 pct YTD as investors wary of outlook * Defence contractors gain on news of export-ban lift * Insurers hit by report of heavy snow-related payouts By Tomo Uetake TOKYO, Feb 24 Japan's Nikkei share average climbed to a three-week high in choppy trade on Monday morning as speculators jumped on a slight weakening in the yen to cover their short positions. But many investors stayed on the sidelines looking for clearer signs of improvement in Japanese corporate earnings, giving no more than a passing nod to the Group of 20's latest commitment to spur faster global growth. The benchmark Nikkei gained as much as 0.8 percent to 14,982.53 - its highest level since Jan. 31 - after rising 2.9 percent on Friday. It pared gains and ended the morning session 0.1 percent higher at 14,880.72. Although the Nikkei initially fell, speculators bought back Nikkei futures , as the yen's slight fall automatically kicked in popular algorithm-driven trades to sell the yen and buy Nikkei shares. That was a popular strategy last year, when the Nikkei jumped 57 percent and the dollar gained 21 percent on the yen. But the benchmark is still down nearly 9 percent so far this year, making it one of the worst performing markets. Traders said many long-term investors refrained from making big bets as emerging market woes and a possible slowdown in the U.S. economy, weather-related or not, could undermine their rosy view of Japanese earnings. "We are not out of the woods yet in terms of getting clarity on which direction this market is going. There is a little bit of bears and obviously still quite a lot of bulls in the market but we haven't convincingly got out of this potential correction phase," said Stefan Worrall, director of equity cash sales at Credit Suisse in Tokyo. Japanese defence contractors were in demand after Reuters reported that the government has drafted new guidelines that would reverse a decades-old ban on weapons exports, citing a source with knowledge of the matter. Mitsubishi Heavy Industries Ltd rose 1 percent and Kawasaki Heavy Industries Ltd added 1.2 percent. INSURANCE SECTOR HIT But the insurance sector was the worst performer among the Tokyo Stock Exchange's 33 subindexes, falling 1.1 percent. The sector was hurt by growing concerns that insurance payments related to heavy snow this month could reach unprecedented levels. The Nikkei business daily reported on Monday that the country's top three insurers may need to pay a total of 60 billion yen ($584 million). Dealers said trading could be slow this week and next as many big players are likely to be away from the market to attend two big investment conferences on Japanese stocks held in Tokyo, one by CLSA and the other by Daiwa. Credit Suisse's Worrall said many of his clients, foreign fund managers overseas, are in town for those meetings to get a feel on the ground for whether the market selloff seen so far this year is justified. While Japanese companies are expected to report strong profit growth for the fiscal year ending in March, some investors are wary that earnings could disappoint in the half year beginning in April. "Investors' focus has already shifted to the earnings outlook for fiscal 2014," Kazuhiro Miyake, chief strategist at Daiwa Securities, wrote in a note to clients. He noted that the market expects fiscal 2014 first-half earnings to be less rosy when compared with the same half last year. The broader Topix index was up 0.1 percent at 1,223.80 at midday, with volume at 39 percent of the full daily average for the past 90 trading days. The JPX-Nikkei Index 400, an index launched this year comprised of firms with high return on equity and strong corporate governance advanced 0.1 percent to 11,059.15.