* Buying of indiviudal firms shows appetite still there
* March futures, options likely settled at 10,286.48
* Impact from PM Kan donation issue limited
By Ayai Tomisawa and Antoni Slodkowski
TOKYO, March 11 (Reuters) - Japan's Nikkei average extended
losses to hover around five-week lows on Friday on concerns
about the global economy and unrest in Saudi Arabia, but
advances in individual shares helped trim losses, showing bulls
are still ready to buy on dips.
Adding to ongoing worries about unrest in Libya, reports of
police firing on protesters in Saudi Arabia revived fears of
further unrest in the world's top oil exporter, while the euro
fell after a downgrade of Spain's credit rating by Moody's,
souring sentiment in equity markets.
But the Nikkei's fall was limited as bargain-hunters snapped
up individual issues on positive news. KDDI Corp jumped
3 percent on a business reorganisation, Mitsubishi Heavy
added 2 percent on a brokerage upgrade, while Kirin
Holdings rose on its purchase of a Vietnam-based drinks
maker.
"This proves that many consider recent lows as a great
buying opportunity and are holding on to hopes that the Middle
East situation will somwhat settle, oil prices fall and the
rebound in the U.S. economy continue pushing the dollar higher
against the yen," said Masayuki Kubota, a senior fund manager at
Daiwa SB Investments.
The Nikkei has gained some 12 percent since the beginning of
November and despite a spike in oil prices over the last three
weeks Tokyo stocks have proved largely resilient, with the
Nikkei holding on to some of its year-to-date gains as investors
reassessed risk within their equities portfolios instead of
moving out of stocks altogether.
"But players are increasingly nervous about the 'risk'
scenario in which high oil prices stoke inflation, spurring more
tightening steps in China, halting the recovery," Kubota said.
China's report that inflation in February remained around
the 5 percent mark, suggesting tighter monetary policy may be
needed, added to uncertainty after it reported an unexpected
trade deficit on Thursday.
By late afternoon the benchmark Nikkei was down 1
percent or 105.50 points at 10,328.88. Near-term support is seen
at its year-to-date low of 10,237.92. The broader Topix
index shed 1.1 percent to 921.05.
While it has shed 2.4 percent this week so far, a stochastic
technical indicator showed that Japanese stocks are oversold,
also providing some support to the market.
Nikkei futures and options contracts expiring in March
likely settled at 10,286.48, Tokyo market participants said on
Friday, citing estimates by local brokerages.
KDDI JUMPS
Shares of KDDI Corp jumped 2.8 percent to 555,000
yen, becoming the biggest percentage gainer among the Nikkei 225
companies, after Japan's No.2 phone company said it will merge
its content and smartphone platform development sections.
Separately, Japanese Prime Minister Naoto Kan said on Friday
he would not resign, after admitting that his political funds
body had received donations from a South Korean resident of
Japan, Kyodo news agency reported. Political donations from
foreign nationals are illegal in Japan.
Observers said any immediate impact on the market
should be limited.
"Japanese politics usually has little impact on the market.
Developments in the Middle East and the performance of U.S.
stocks have a bigger impact on the Japanese market," said a
market analyst, who declined to be quoted by name.
Exporters were lower on worries about the global economy,
with Honda Motor falling 1.3 percent to 3,355 yen,
Advantest dropping 2.2 percent to 1,683 yen and Sony
Corp shedding 1.5 percent to 2,826 yen.
RUNNING UP
Shares in Japan's largest heavy machinery maker, Mitsubishi
Heavy Industries Ltd, advanced 1.7 percent to 360 yen after
Nomura Securities hiked its rating to "buy" from "neutral" on
expectations of an increase in demand for gas turbines and a
contribution to profit growth from power systems after-sales
services.
Kirin Holdings Co gained 0.4 percent to 1,173 yen
after it said on Thursday it has acquired all outstanding shares
in Malaysian holding company Trade Ocean Holdings, which holds a
57.25 percent stake in Vietnam-based soft drinks maker Interfood
Shareholding Co , in a bid to expand further into
emerging markets.
(Reporting by Ayai Tomisawa; Editing by Michael Watson)
