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Nikkei ekes out 4-mth closing high; traders gain

* Traders buoy market; automakers also edge up in thin trade

* JAL falls to record low as worries about bankruptcy grow

* Nikkei marks 20th anniversary of lifetime high

TOKYO, Dec 29 (Reuters) - Japan's Nikkei average eked out a four-month closing high on Tuesday, buoyed by trading firms such as Mitsui & Co 8031.T after gains in oil and metals prices, while automakers also edged up.

Japan Airlines 9205.T fell over 10 percent at one point to a record low after media reports that a state-backed turnaround fund now weighing whether to support JAL with loans and investments was considering a bankruptcy filing as one component of its restructuring plan. [ID:nTOE5BR00D]

In thin and choppy trade on the second to last trading day of 2009, the benchmark Nikkei .N225 spent much of the day in negative territory before edging up a mere 3.83 points to 10,638.06. It hit a fresh four-month intraday high of 10,683.12 in early trade.

“Investors seem to be using the last days of this year to search for theme stocks -- companies connected to emerging markets, which are likely to remain strong next year, as well as resource-linked shares,” said Noritsugu Hirakawa, a strategist at Okasan Securities.

The broader Topix .TOPX rose 0.1 percent to 915.87.

Twenty years ago on Tuesday the Nikkei marked a record high of 38,915.87 at the peak of Japan’s asset price bubble, nearly four times the current level.

Still, the benchmark has clawed back about 50 percent since hitting a 26-year closing low in March as global economic stimulus measures have helped turn around the world economy.

Though optimism is spreading about what may lie ahead in 2010 for the Nikkei, caution lingers as well.

“The market appears to be looking at a slow recovery next year, though there are still likely to be some unseen risks ahead and the chance of some unpleasant surprises,” said Hiroaki Osakabe, a fund manager at Chibagin Asset Management.

“Yet I don’t think we’ll face anything as bad as what happened to markets after last year’s Lehman failure.”

Others were even warier.

“Caution will be also necessary as we head into the new year. It’s hard to think the market will just keep rising as there’s still a chance it could very well test another trough,” said Yutaka Miura, chief technical analyst at Mizuho Securities.

JAL TUMBLE, TRADERS GAIN

Sources told Reuters on Monday the Enterprise Turnaround Initiative Corp of Japan has told creditors it may look to have JAL use the Corporate Rehabilitation Law, a process similar to Chapter 11 in the United States that could wipe out the value of JAL’s shares.

The ETIC has not ruled out an out-of-court restructuring in coordination with JAL’s main creditors, the sources said.

No one at JAL could be immediately reached for comment.

“There’s a lot of concern about what might happen if JAL does end up going through bankruptcy court, what will happen to shareholders if the stock basically becomes worthless,” said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.

JAL ended down 8.3 percent at 88 yen after falling as low as 85 yen.

Shares of Japanese exporters took a breather. Electronics parts maker Kyocera Corp 6971.T fell 1.4 percent to 8,190 yen, chip-tester maker Advantest Corp 6857.T lost 2.2 percent to 2,435 yen and Canon Inc 7751.T slipped 1.3 percent to 3,910 yen.

Yet other exporters, such as Toyota Motor Corp 7203.T, edged higher. Toyota gained 0.8 percent to 3,890 yen and Honda Motor Co 7267.T edged up 0.3 percent to 3,140 yen.

Trading houses gained after oil touched a five-week high over $79 a barrel on Monday as expectations of colder weather in the United States and signs of economic recovery boosted the outlook for fuel demand. [O/R]

Mitsui & Co rose 2.1 percent to 1,329 yen and Mitsubishi Corp 8058.T gained 1.5 percent to 2,315 yen.

Shares of Pioneer Corp 6773.T fell 4.6 percent to 289 yen after the struggling electronics maker said on Monday it would postpone the planned sale of shares to Honda Motor Co 7267.T for the third time following similar announcements in June and September.

Trade was light on the Tokyo exchange’s first section, with 1.57 billion shares changing hands, below last week’s daily average of 1.73 billion.

Advancing stocks outnumbered declining ones, 905 to 630. (Additional reporting by Aiko Hayashi; Editing by Michael Watson)

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