Japan's Nikkei up 0.9 pct as exporters, banks gain

(Updates to midmorning)

TOKYO, July 18 (Reuters) - Japan's Nikkei average rose 0.9 percent on Friday, as a softer yen lifted exporters like Honda Motor Co (7267.T) and banks gained after JPMorgan's profit fell less than expected.

Brokerages including Nomura Holdings Inc (8604.T) and Daiwa Securities Group (8601.T) also climbed sharply.

Trade is expected to be thin, with the market's gains limited before a three-day weekend and following some disappointing U.S. earnings results released after the bell. Japanese markets are closed on Monday for a national holiday.

"Exporters are rising thanks to a softer yen, but it's mostly buybacks of battered shares. We are not seeing a build-up of long positions," said Masanobu Takahashi, chief strategist at Ichiyoshi Securities.

"Merrill's results were also bad. Investors are not in the mood for a buying spree," he said.

As of 0050 GMT, the benchmark Nikkei .N225 was up 111.69 points at 12,999.64. The broader Topix gained 1 percent to 1,276.45.

U.S. stocks soared on Thursday on a sharp drop in oil prices and several unexpectedly strong earnings reports, but the rally may not hold into Friday, given disappointing results from after the close.

Merrill Lynch MER.N reported a much larger-than-expected $4.89 billion quarterly loss because of soured holdings of mortgages and other risky debt, and unveiled plans to sell billions of dollars of assets to shore up capital. [ID:nnN17199614]

Honda Motor gained 2.7 percent to 3,490 yen, the biggest contributor to the Nikkei. Toyota Motor Corp (7203.T) rose 1.7 percent to 4,760 yen.

Japan's major banks extended gains, with top lender Mitsubishi UFJ Financial Group (8306.T) up 2.6 percent at 980 yen.

Nomura rose 2.9 percent to 1,575 yen and Daiwa Securities gained 2.3 percent to 943 yen. Shinko Securities Co Ltd (8606.T) rose 3 percent to 341 yen.

Nomura said on Friday it will launch full-scale operations in India, expanding into stock trading and asset management. [ID:nT198814] (Reporting by Taiga Uranaka; Editing by Chris Gallagher)