Nikkei up on business mood poll and oil, banks slip

(Adds stocks, details)

*Tankan survey gives boost, but longer-term outlook clouded

*Steelmakers dip after agreeing to price hike

*Nikkei on track to snap eight-day losing streak

By Elaine Lies

TOKYO, July 1 (Reuters) - Japan's Nikkei stock average rose 0.3 percent on Tuesday, buoyed by a better than expected business mood survey, with Mitsubishi Corp (8058.T) and other trading houses rising after oil hit a new record high.

Nippon Steel Corp (5401.T) and JFE Holdings Inc (5411.T) edged down after saying they had agreed with global miner Rio Tinto (RIO.AX)(RIO.L) to pay nearly double the previous price for Australian iron ore, and banks were shaky after their U.S. peers slid on renewed credit worries. Confidence among big Japanese manufacturers fell to a five-year low in June, the Bank of Japan's tankan survey showed, though the fall was less than expected, helping push up shares. But market players said the gains from this would be temporary at best.

"People had been expecting the tankan to be terrible, so when it turned out better than expected, it helped the Nikkei rise," said Takashi Ushio, head of the investment strategy division at Marusan Securities.

"But when they calmed down and took a good look at it, it showed that sentiment has really chilled. So that will keep the Nikkei from rebounding as it otherwise might."

The Dow .DJI ended flat on Monday, and this also helped support the Nikkei, as did the sense that Japanese shares were due for a rebound after an eight-day losing streak that saw the market lose roughly 6.7 percent.

"There's a sense that Japanese shares are now easy to buy," said Yoku Ihara, manager at Retela Crea Securities.

The benchmark Nikkei .N225 gained 45.15 points to 13,526.53, while the broader Topix was up 0.5 percent at 1,326.76.

OIL, STEEL, BANKS

Oil surged to a record high of $143.67 on Monday before settling at $140 a barrel CLc1. It stood at $140.48 at 0218 GMT.

Trading houses climbed in response, with Itochu Corp (8001.T) jumping 3.5 percent to 1,171 yen, becoming one of the biggest percentage gainers on the Nikkei 225. It was followed closely by Mitsubishi Corp, which gained 2.9 percent to 3,600 yen and Sojitz Corp (2768.T), which rose 3.4 percent to 366 yen.

Steelmakers slipped, but market players said the long-term impact of the iron ore price hike might not necessarily be negative. "This will certainly add to costs, but this would also allow steelmakers to raise their prices, so that once they've absorbed the news of the ore hike the outlook may not be so bad," Marusan's Ushio said.