Nikkei up as Wall St. rally calms China worries

(Updates to midmorning)

TOKYO, May 31 (Reuters) - The Nikkei average gained more than 1 percent on Thursday as shares of technology firms such as Sony Corp. (6758.T) rose after gains on Wall Street eased concerns about China's stock sell-off.

China's benchmark Shanghai Composite Index .SSEC tumbled 6.5 percent on Wednesday, booking its second-biggest fall this decade and worrying investors in Tokyo about a potential worldwide equity sell-off.

A rally on Wall Street, however, erased much of the immediate concern about a global slump, said Ken Masuda, a senior dealer in equities at Shinko Securities.

"I was surprised by the U.S. I didn't expect a rise like that at all," Masuda said.

Yet Masuda said the advance may be short term.

"China is overheated ... Everyone there is starting to invest in stocks. It looks dangerous."

The Nikkei .N225 was up 184.11 points at 17,772.37 as of 0100 GMT.

The broader TOPIX index gained 0.85 percent to 1,748.41.

Tech firms were among the advancers. Sony rose 1.7 percent to 7,030 yen.

Shares of Risa Partners (8924.T) extended gains from the previous session, rising 2.8 percent to 368,000 yen after the real estate investment firm's president told Reuters on Wednesday it is likely to buy an asset management company or financial services company in the next three years to expand its business. [ID:nT76300]

The firm is already looking at potential partners and is eyeing services such as real estate collateral financing and mezzanine loans, its President Atsushi Imuta said in an interview, referring to a type of loan that is a hybrid of debt and equity financing.