Japan Nikkei edges lower, but trading houses gain

(Updates to midmorning)

TOKYO, July 4 (Reuters) - Japan's Nikkei stock average edged down 0.2 percent on Friday, a day after hitting its longest losing streak in more than half a century, with Mitsui & Co (8031.T) and other trading houses making gains after oil hit a record high over $145 and exporters adding buoyancy. Komatsu Ltd (6301.T) climbed after the Nikkei business daily said the earth-moving equipment maker's operating profit is likely to have risen 7 percent to about 85 billion yen for the April-June quarter, a first-quarter record, thanks to strong demand for construction equipment in emerging economies.

But with a slew of big events over and U.S. markets closed on Friday for Independence Day, investors were searching for direction and the market was moving more according to share-specific factors than any comprehensive market factors.

"We're seeing a lot of attention on 'theme' stocks, such as environmental shares and shares with strong fundamentals," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

"There's some short-covering going on, but without any real reason to bid the market higher gains will be limited."

The dollar rallied on Thursday after jobs data suggested the U.S. job market and economy were not as badly off as many had feared, while the European Central Bank president struck a less aggressive tone on prospects for interest rate hikes. [ID:nN03478178]

"Basically, we avoided a lot of potential trouble yesterday, and this has reassured the market a bit, leading to the short-covering," Akino added.

The benchmark Nikkei .N225 had shed 34.61 points to 13,230.79 while the broader Topix was down by 0.1 percent at 1,296.78

Mitsui & Co was up by 0.4 percent at 2,320 yen after oil rose to a record above $145 on escalating tensions between Israel and Iran, with further support coming from speculators hedging against inflation.

Itochu Corp (8001.T) was up 1.3 percent at 1,117 yen

Some exporters rose as well, with Toyota Motor Co (7203.T) up 0.6 percent at 4,930 yen and Hitachi Ltd (6501.T) gaining 0.3 percent at 751 yen.

But the market was dragged lower by high-tech firms such as Tokyo Electron (8035.T) and Advantest Corp (6857.T) after the Philadelphia Semiconductor Index .SOXX lost 1 percent, with Tokyo Electron shedding 2.1 percent to 5,830 yen and Advantest down 2.7 percent to 2,160 yen. (Reporting by Elaine Lies; editing by Sophie Hardach)