Nikkei up 0.4 pct, exporters and financials advance

*Nikkei up 0.4 pct, exporters, financials gain

*Market still cautious about earnings and ahead of holiday

*Inpex extends losses on overnight fall in oil price (Adds stocks and comments)

By Taiga Uranaka

TOKYO, July 18 (Reuters) - Japan's Nikkei average rose 0.4 percent on Friday, as a softer yen lifted exporters like Honda Motor Co (7267.T) and financial shares gained after JPMorgan's (JPM.N) profit fell less than expected.

But the benchmark slipped back after flirting with the psychologically important 13,000 mark on caution following some disappointing U.S. earnings results released after the bell and ahead of a three-day weekend.

"Investors haven't let down their guard. Bad earnings from the U.S. came out after the bell and there is growing nervousness about Japanese corporate earnings that begin next week," said Katsuhiko Kodama, senior strategist at Toyo Securities.

"On top of that, we have a three-day weekend and Citi earnings tonight," he said.

Japanese markets are closed on Monday for a national holiday.

The benchmark Nikkei .N225 ended the morning up 50.34 points at 12,938.29 after rising as high at 12,999.64 at one point. It has not topped 13,000 since Tuesday.

The broader Topix gained 0.3 percent to 1,267.59.

"What's happening is an unwinding of short positions, not buildup of long positions," said Masanobu Takahashi, chief strategist at Ichiyoshi Securities.

"The Japanese market has been more resilient when other markets fall, but it also lags when others are climbing. Japanese stocks do not have any compelling appeal now," he said.

U.S. stocks soared on Thursday on a sharp drop in oil prices and several unexpectedly strong earnings reports.

But after the close, Merrill Lynch MER.N reported a much larger-than-expected $4.89 billion quarterly loss on soured holdings of mortgages and other risky debt, and unveiled plans to sell billions of dollars of assets to shore up capital. [ID:nN17199614]

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