Japan stocks up 2 pct as exporters gain on soft yen

(Updates to midafternoon)

TOKYO, July 24 (Reuters) - Japanese stocks rose 2 percent on Thursday, and looked poised to mark a four-week closing high, as Toyota Motor Corp (7203.T: Quote, Profile, Research, Stock Buzz) and other car makers led gains by exporters on a softer yen and a drop in oil prices.

Toray Industries (3402.T: Quote, Profile, Research, Stock Buzz) and Mitsubishi Rayon (3404.T: Quote, Profile, Research, Stock Buzz) surged after they said would work with other firms to develop a new carbon fibre material for cars in an effort to lighten vehicles for better fuel efficiency. [ID:nT313639]

The weaker yen and the slide in oil prices had eased some concerns about corporate earnings, which together with lessening worries about the U.S. financial system had improved market sentiment, said Naoki Koga, senior fund manager at Toyota Asset Management.

But he added that further gains would be limited ahead of Japanese corporate earnings which kick off next week.

"There are fewer reasons to sell, but investors still can't buy aggressively as concerns about U.S. financials haven't been completely wiped away and investors want to see how first quarter earnings turn out," he said.

"Japanese corporate earnings probably won't be horrible because of a weakening yen, but they won't be good, either."

As of 0452 GMT, the benchmark Nikkei average .N225 had added 2.1 percent to 13,587.90, moving above its 25-day moving average and on track for its highest finish since late June.

The broader Topix rose 2 percent to 1,329.78.