* China official PMI report triggers short-covering * Market cautious as earnings in full swing, U.S. jobs data awaited - analyst By Ayai Tomisawa TOKYO, Aug 1 (Reuters) - Japan's Nikkei share average rose in choppy trade on Thursday morning as investors zoomed in on a better-than-expected Chinese manufacturing report, while a handful of positive earnings also helped support the market. China's official purchasing managers' index (PMI) rose to 50.3 in July from June's 50.1, and was stronger than market expectations in a Reuters poll of 49.9, easing some concerns of a sharp slowdown in Asia's biggest economy. With markets bracing for a downside surprise, the increase in the PMI came as a relief to investors even as the private HSBC PMI, which was released after the official figure, showed activity shrank for a third straight month in July to its lowest level in nearly a year as new orders fell. China is Japan's second-biggest export market. "Most of us had expected that the data would be bad, so the better-than-expected official figure forced pessimistic investors to cover their short positions," said Takatoshi Itoshima, chief portfolio manager at Commons Asset Management. The Nikkei gained 1.2 percent to 13,827.43 at the midday break after briefly trading in negative territory earlier. The better-than-expected China's official PMI report increased investors' appetite in companies reporting strong earnings, analysts added. Panasonic Corp soared 5.1 percent after it said its operating profit jumped by two-thirds for the April-June quarter. Mizuho Financial Group Inc rose 2.0 percent after reporting a 35 percent rise in net profit. Still, the rally may be short-lived as investors remain focused on a further batch of corporate earnings and macro events such as Friday's U.S. jobs data, analysts said. "Now is not the time to be taking a risk proactively," said Hiromichi Tamura, chief strategist at Nomura Securities. Despite the positive earnings, investors were also having to contend with some disappointments. Shares in Toshiba Corp dropped 5.7 percent and was the fifth most traded stock by turnover after its quarterly profit was hit by losses in its consumer electronics business and fell short of forecasts. Asahi Glass tumbled 8.4 percent after the company cut its outlook for the year through December as well as its dividend payout outlook. Companies including Sony Corp, Sharp Corp and Suzuki Motor Corp are also set to report first-quarter results later on Thursday. In the short-term, support for the Nikkei is seen at 13,630, a 50 percent retracement of its rise from a low in June 13 to a high on July 18, the lowest and highest closing levels since May 23, respectively. Markets are also watching out for the direction of U.S. monetary policy after the Federal Reserve on Wednesday refrained from providing any indication that its stimulus might be scaled back soon. "The Nikkei's correction phase (after hitting peak on May 23) is still continuing as gains are capped by both domestic and overseas factors," said Yutaka Yoshino, chief technical analyst at SMBC Nikko Securities. "But within another two-to-three month time frame, the Nikkei will likely show a steady rise as there will be some more clarity on the Fed's tapering plan and Japan's full-year earnings." The Topix gained 1.5 percent to 1,149.05. The Fed's commitment to easy money should support global riskier assets although traders are likely to continue speculating about the timing of the stimulus reduction which has roiled markets in recent months. The benchmark Nikkei has fallen about 14 percent since that mulityear high on May 23, but is still up 31 percent this year.