* Nikkei erases losses, ends up after briefly losing 1 pct
* European funds seen buying blue-chips on dips; exporters up
* But fall in Chinese shares a concern
TOKYO, Nov 17 (Reuters) - Japan’s Nikkei stock average erased earlier losses and clawed up 0.2 percent on Wednesday as a softer yen against the dollar prompted investors to hunt for bargains in carmakers and other exporters.
The Nikkei fell about 1 percent at the open after Wall Street stocks dropped nearly 2 percent due the prospect of more European bailouts and concerns over further tightening measures by China.
But foreign investors such as European fund operators were detected buying Japanese blue-chip shares, providing support to the market, traders said.
“The Nikkei had a lower start following falls in overseas stocks. But the yen is weakening against the dollar, and that’s supporting some of major exporter shares and keeping sentiment from deteriorating,” said Yumi Nishimura, deputy general manager at Daiwa Securities Capital Markets.
“Worries about rate hikes in China and the situation in Ireland are not particularly new, and at least at this point, falls in overseas stocks and commodities appear to be due to mostly profit-taking.”
The benchmark Nikkei .N225 finished the day up 14.56 points at 9,811.66, after falling to a session low at the open of 9,693.21.
The broader Topix .TOPX rose 0.3 percent to 850.30.
The dollar was trading at 83.45 yen, near a six-week high of 83.60 yen reached on Tuesday.
The euro hovered near a seven-week low versus the dollar, with no immediate solution for Ireland’s debt crisis in sight. While euro zone finance ministers agreed to lay the groundwork for bailing out Ireland’s banking sector with the IMF, Dublin has yet to decide whether to request the aid. [FRX/]
The market is watching whether the Nikkei can rebound towards its five-month intraday high of 9,908.30 hit on Tuesday.
The Nikkei is then expected to face resistance at the 200-day moving average of 9,920, but a decisive break above that level could pave the way for it to rise to the closely watched 10,000 mark, traders said.
“If the dollar is up due to the unwinding of dollar-carry positions for the purpose of cutting exposure to risk assets then that may not be too positive for the Nikkei,” said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.
“Big falls in China and other emerging markets also may not necessarily be good for the Japanese market as more bargain-hunting flows could go into emerging markets.”
The Shanghai Composite Index was down more than 2 percent on speculation of more aggressive measures to control inflation by China.
RESOURCE STOCKS WEIGH, AUTOS UP
Resource-related shares such as trading house Mitsubishi Corp 8058.T fell after commodity prices dropped broadly the previous day due to wariness over further Chinese tightening measures and the dollar's strength.
Mitsubishi slipped 0.6 percent to 2,089 yen and Mitsui & Co 8031.T fell 1.3 percent to 1,298 yen.
Mazda Motor Corp 7261.T jumped 3.1 percent to 231 yen after the Nikkei business daily said trading house Itochu Corp 8001.T and general contractor Kajima Corp 1812.T are among the nearly 10 firms that will buy Ford Motor Co's F.N stake in the automaker. [ID:nSGE6AF0K1]
Asics Corp 7936.T leapt 6.9 percent to 917 yen after the sporting goods company said it aims to nearly double sales to more than 400 billion yen in the financial year to March 2016.
Trade was light on the Tokyo exchange’s first section, with 1.54 billion shares changing hands, its lowest volume in about three weeks.
Advancing stocks outnumbered declining ones, 872 to 581. (Additional reporting by Antoni Slodkowski; Editing by Chris Gallagher)
Our Standards: The Thomson Reuters Trust Principles.