* China, Aussie data give Nikkei a lift
* An apparent halt in yen advance buoys stocks -analyst
* Next target for Nikkei at 8,697, 61.8 pct retracement
* But investors eye U.S. data, worry about more dlr selling
TOKYO, Sept 1 (Reuters) - Japan's Nikkei rose 1.1 percent
after hitting a 16-month low on Wednesday, drawing support from a
halt in the rapid advance in the yen on a manufacturing rebound
in China and stronger-than-expected growth in Australia.
Market players said other help came from a slight spike in
dollar/yen after news that Japanese political powerbroker Ichiro
Ozawa, challenging Prime Minister Naoto Kan in a party leadership
vote, said in a policy statement he would implement steps
including currency intervention if the yen rose rapidly.
"Investors welcomed growing signs of a halt in the advance in
the yen against the dollar, stemming from yen crosses after
Australian growth data showed improvement and China's data came
in strong," said Hiroaki Kuramochi, chief equity marketing
officer at Tokai Tokyo Securities.
"Ozawa's comment on intervention is probably an additional
positive factor, but the main catalysts for stock gains are signs
of a stop in the yen's fast advance and the solid performance in
other Asian stocks."
The benchmark Nikkei <> rose 96.10 points to 8,920.16,
after earlier falling as low as 8,796.45, its lowest since April
2009.
The broader Topix <> added 0.6 percent to 809.31.
China's official purchasing managers' index rose to 51.7 in
August from a 17-month low of 51.2 in July, while Australia's
economy grew a stronger-than-expected 1.2 percent in the second
quarter. [] []
The Australian dollar rose 1.1 percent to 75.92 yen
<AUDJPY=R> and the greenback edged up 0.4 percent to 84.50 yen
<JPY=>. []
Ozawa said in a statement that he would use 2 trillion yen
($23.76 billion) of reserve funds in the budget for the current
fiscal year to next March for economic steps.
But market players said some investors were likely to stay
sidelined with the battle between Kan and Ozawa for leadership of
the ruling party, and hence the premiership, opening on
Wednesday. The party will hold its leadership vote on Sept. 14.
[]
Shortly after the opening the benchmark fell below 8,800 for
the first time in 16 months, with market players saying sentiment
remained fragile with investors worried about possible negative
surprises from a slew of U.S. indicators due out this week,
including jobs data.
ADP private employers data is due out later on Wednesday,
with non-farm payrolls on Friday.
The next target for the Nikkei is 8,697, a 61.8 percent
retracement of the Nikkei's rally from its March 2009 low to its
April 2010 high.
HITACHI UP, CHINA-LINKED STOCKS HIGHER
Shares of Hitachi Ltd <6501.T> climbed 2.1 percent to 347 yen
after sources familiar with the matter said the company is
planning an initial public offering of its hard-drive unit in the
United States, possibly by the year-end.
Sources said bankers are in discussion with the Japanese
company about an IPO and underwriters could be named in early
September. The hard-drive unit, Hitachi Global Storage
Technologies (HGST), is the world's No.3 hard drive maker and
analysts said it could be valued at about $3 billion.
[]
Shares of companies with strong businesses in China gained,
with Hitachi Construction <6305.T> up 2 percent to 1,703 yen and
Komatsu <6301.T> rising 1.4 percent to 1,729 yen.
Tech shares that were sold sharply on Tuesday crawled higher,
but exporters erased early gains to head lower, with some
blue-chip shares hitting multimonth lows.
Toyota Motor Corp <7203.T> was down 0.8 percent at 2,837 yen,
after falling as low as 2,806 yen, its lowest in about 17 months.
Toshiba Corp <6502.T> was down 2.5 percent at 385 yen after
hitting its lowest in 13 months and Sharp Corp <6753.T> was down
0.9 percent at 797 yen after touching its lowest in 17 months.
(Reporting by Aiko Hayashi; Editing by Joseph Radford)
