Nikkei ends up 0.1 per cent

But the securities sector underperformed,with Nomura Holdings falling 1.2 per cent to 419 yen after Credit Suisse cut its rating on the stock to 8220;neutral8221; from 8220;outperform8221;,citing poor valuations and likely unfavourable earnings.

Tokyo stocks have regained around two-thirds of the losses suffered after the March 11 earthquake,but trade has turned more volatile and thinned out ahead of earnings reports that may pose more questions than give answers as many firms are poised not to give forecasts for the business year.

While the Nikkei remains more than 7 per cent below its pre-quake levels,the MSCI index of Asian stocks outside Japan has gained 8 per cent since the disaster.

8220;I look at the Nikkei level now and I8217;m not sure if it8217;s low or high,8221; said Yuuki Sakurai,CEO of Fukoku Capital Management,citing reasons such as the unclear situation at the quake-stricken nuclear plant,the difficulty of assessing damage to supply chains and the unpredictable impact of power cuts on industry.

The Reuters Tankan survey of 400 large firms found on Thursday that power shortages caused by the crippled Fukushima Daiichi nuclear plant had hit nearly 60 per cent of local companies,disrupting production and supply chains.

8220;I talked to some investors from Singapore yesterday,and I see a lot of uncertainty among foreigners as the impact of all this on the Japanese economy is very difficult to gauge,8221; Sakurai added.

Business confidence,which had been recovering,fell back into negative territory for the first time this year,with the gloom spreading through both the manufacturing and service sectors,the Reuters Tankan showed.

The Nikkei benchmark closed up 0.1 per cent or 12.74 points at 9653.92,after having dipped earlier. The broader Topix gained 0.3 per cent to 846.72.

The Nikkei found support at its 25-day moving average at 9,563.77.

8220;Right now,both institutional investors and retail investors are engaging in short-term trading,8221; said Fujio Ando,a strategist at Chibagin Asset Management. 8220;Before corporate earnings forecasts are out,they will not be able to trade on fundamentals.8221;

Ando said the Nikkei may trade between 9,500 and 9,800 until mid-May,when most earnings results will have been announced.

CARS LEND SUPPORT

Foreign investors bought a hefty 390 billion yen 4.6 billionof Japanese shares last week,the third-biggest weekly purchase in about a year,government data showed.

Some fund managers were more optimistic about the outlook for manufacturers,citing expectations for a sharp recovery in the second half of the business year.

8220;I look closely at carmakers,and their recent strong performance is lending support to the overall market,8221; said Kiyoshi Noda,chief fund manager at MU Investments.

8220;We also see interesting moves in companies whose growth won8217;t be affected much by the quake like Fanuc,8221; added Noda.

Fanuc Ltd ,an industrial robot maker with high exposure to emerging markets and with an almost 5 per cent weighting in the Nikkei index,has gained some 7 per cent in heavy volume over the last week.

The most actively traded share since the quake,Tokyo Electric Tepco ,shed 0.4 per cent to 500 yen after soaring on Wednesday on a report that its liabilities stemming from the nuclear crisis may be capped.

The operator of Japan8217;s crippled nuclear plant said on Wednesday it was still working on a detailed plan to end the country8217;s nuclear crisis a month after it began,as tests showed radiation levels in the sea near the complex had spiked.

Toshiba Corp rose 2 per cent to 404 yen after its chief executive said on Thursday that the company expects its operations to recover in the second half of this financial year after being hit by supply chain disruptions in the wake of the March 11 earthquake and tsunami.

Construction engineering company Modec Inc rose 5.2 per cent to 1,532 yen after saying on Wednesday that Woodside Petroleum has named it as one of two companies to conduct front-end engineering design FEED for two dry tree units for the Browse liquefied natural gas project in Western Australia.