Nikkei rises 1.2 pct as Matsushita jumps, banks gain

                                
 (Updates to late morning)
                                
 TOKYO, July 30 (Reuters) - The Nikkei average rose 1.2
percent on Wednesday, with Matsushita Electric Industrial Co
<6752.T> jumping on strong earnings results and financial shares
gaining on receding U.S. credit fears.
                                
 But investors dumped Sony Corp <6758.T> after it posted a
bigger-than-expected fall in quarterly profit and cut its
outlook, hurt by its struggling mobile phone joint venture with
Sweden's Ericsson <ERICb.ST>. [ID:nT38464]
                                
 Merrill Lynch's <MER.N> latest plans to write down $5.7
billion and raise $8.5 billion by selling new stock, announced on
Monday, hinted at a possible turning point in the credit crisis
and helped U.S. stocks move higher. [.N]
                                
 "Merrill's measures are a huge step forward, and other
financial institutions may follow suit," said Katsuhiko Kodama,
senior strategist at Toyo Securities.
                                
 "This means the brokerage can take care of its losses and we
are beginning to see the light at the end of the tunnel," Kodama
said.
                                
 The benchmark Nikkei <.N225> added 156.26 points to end the
morning session at 13,315.71, trading above its 25-day moving
average.
                                
 The broader Topix <.TOPX> climbed 1 percent to 1,294.77.
                                
 Japan's earnings season in now in full swing and companies
announcing results later in the day include NTT DoCoMo <9437.T>,
Daiwa Securities Group Inc <8601.T> and Nintendo Co Ltd
<7974.OS>.
                                
 "Japanese corporate earnings will drive the market from now
on," said Junichi Misawa, executive officer at STB Asset
Management.
                                
 "Earnings drew a clear contrast between Sony, whose results
were a bit of a negative surprise, and Matsushita, whose results
were a positive surprise."
                                
 MATSUSHITA UP, SONY DRAGS
                                
 Matsushita shot up 6 percent to 2,310 yen, one of the biggest
positive contributors to the Nikkei 225, after the company
reported an 86 percent rise in quarterly net profit to a record
73 billion yen, helped by strong sales of flat TVs. [ID:nT38464]
                                
 Sony slid 3.6 percent to 4,060 yen, the second-biggest drag
on the Nikkei 225.
                                
 Top lender Mitsubishi UFJ Financial Group <8306.T> rose 0.7
percent to 965 yen and No.2 Mizuho Financial Group <8411.T> added
1.5 percent to 538,000 yen.
                                
 Nomura Holdings <8604.T>, Japan's biggest brokerage, climbed
2.3 percent to 1,578 yen, even after posting an unexpected
quarterly net loss. [ID:nSP339791]
                                
 Daiwa, which will report results after the close, gained 1.7
percent to 972 yen.
                                
 Trading was light on the Tokyo exchange's first section, with
806 million shares changing hands, compared with last week's
morning average of 851 million.
                                
 Advancing shares beat declining ones by a ratio of more than
4 to 1.
 (Reporting by Aiko Hayashi; Editing by Hugh Lawson)