Nikkei edges up, defensive buying vies with yen

(Updates to midmorning)

TOKYO, Dec 4 (Reuters) - Japan's Nikkei average edged up 0.4 percent on Thursday, weighed by the yen's slow advance but boosted by Eisai Co Ltd (4523.T) and other defensive shares in the face of growing worry about the global economy.

Japan's top refiner Nippon Oil Corp (5001.T) climbed more than 10 percent and sixth-ranked Nippon Mining Holdings Inc (5016.T) surged over 14 percent after they said they are considering a merger to better compete amid sliding prices and slower demand. [ID:nT282839]

Shares of Sanyo Electric (6764.T) tumbled 13 percent to 147 yen after the Nikkei business daily said Panasonic Corp (6752.T) has raised its buyout offer for Sanyo by 10 yen to 130 yen per share in the hope of closing a deal this week. [ID:nN03348603]

Shares of Panasonic fell 3.5 percent to 1,054 yen.

"Basically we're moving within a bear market, and given the trend towards a strong yen, people who want to buy stocks have no choice besides defensive shares," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.

"There's not a lot of good news out there, not a lot of buying factors. One of the only good possibilities is the fact that December has traditionally been a good month for stocks both here in Japan and overseas."

Investors were hesitant to buy ahead of major events including Friday's announcement of U.S. jobs data and a decision on the fate of the Big Three U.S. automakers.

Committees in the U.S. Congress are scrutinising auto company restructuring proposals and an urgent appeal for $34 billion in aid ahead of make-or-break hearings, which start on Thursday and will question the chief executives of General Motors Corp (GM.N), Ford Motor Co (F.N) and Chrysler LLC. [ID:nN02292976]

"There's still a lot of uncertainty out there, especially about the Big Three," said Yoku Ihara, a manager at the investment information department of Retela Crea Securities.

The benchmark Nikkei .N225 gained 29.12 points to 8,033.22, while the broader Topix fell 0.1 percent to 798.14.

A key factor was the yen's movements against the dollar, with market players saying the Nikkei was likely to be pressured lower should the dollar venture below 93 yen, as it did on Wednesday when it touched a five-week low.

By midmorning it was edging lower, fetching around 93.22 yen JPY=.

Eisai climbed 2.6 percent to 3,200 yen and fellow drugmaker Astellas Pharma Inc (4503.T) rose 1.6 percent to 3,850 yen. Daiichi Sankyo Co Ltd (4568.T) rose 1.9 percent to 1,885 yen.

Nippon Oil jumped 10.3 percent to 354 yen and Nippon Mining Holdings rose 14.5 percent to 294 yen.

The two firms said they would hold board meetings during the morning to discuss the merger. The combined market capitalisation of the firms was 706 billion yen ($7.57 billion) based on Wednesday's closing share prices.