Nikkei up 0.3 pct, led by exporters on softer yen

*Nikkei up first time in three days, led by exporters

*Credit Saison soars on news of merger talks with Orix

*Energy shares drop on sharp fall in oil prices (Adds stocks and comments)

By Taiga Uranaka

TOKYO, Aug 5 (Reuters) - The Nikkei average rose for the first time in three days on Tuesday, gaining 0.3 percent, as investors picked up recently battered exporters such as TDK Corp (6762.T) and Canon Inc (7751.T) on a softer yen.

Credit Saison (8253.T) soared more than 12 percent after financial sources said the consumer credit company was in merger talk with Orix Corp (8591.T). [ID:nN04518742]

But the market's gains were held in check by a big drop in energy shares, with oil and gas developer Inpex Holdings (1605.T) off 4.1 percent after a sharp fall in oil prices.

Despite the day's rise, market participants said pessimism towards corporate earnings was likely to continue to weigh on Japanese stocks.

"The market is still as if it's just out of a sick bed," said Kazutaka Oshima, chief strategist at Rakuten Securities.

Japanese earnings season is well underway, with Mitsubishi UFJ Financial Group (8306.T) and Softbank Corp (9984.T) among the firms due to announce results after the close.

"There are growing worries about corporate earnings. Amid the deteriorating macroeconomic environment, concerns are rising that exporters like electronics makers and automakers have come to a turning point," said Hideyuki Ishiguro, supervisor at the investment strategy department at Okasan Securities.

Many investors are also expected to hold off making bets as they await a U.S. Federal Reserve rate decision and accompanying statement due later in the day.

The benchmark Nikkei .N225 ended the morning up 34.85 points at 12,968.03. The broader Topix gained 0.1 percent to 1,249.09.

Electronics device maker TDK gained 3.4 percent to 6,320 yen, after falling 8 percent over the previous five days. Digital camera maker Canon climbed 1.3 percent to 4,860 yen.

FAST RETAILING DOWN

Fast Retailing (9983.T) plunged 6 percent to 12,000 yen, becoming the top drag on the Nikkei. Investors locked in profits after it said same-store sales at its Uniqlo casual clothing chain in Japan marked the largest monthly rise in nearly two years in July. [ID:nT255850]