Nikkei gains 1 pct in thin trade, exporters up

                                
 * Nikkei try for 10,400 seen as key to stronger rebound
                                
 * Exporters rise on weaker yen but trade thin, narrow
                                
 By Elaine Lies
                                
 TOKYO, Sept 7 (Reuters) - Japan's Nikkei stock average
climbed 1 percent on Monday as exporters such as Canon Inc
<7751.T> rose, with investors focusing on the bright side of
mixed U.S. jobs data and as the yen retreated against the dollar.
                                
 Advantest Corp <6857.T> and other chip-related shares gained,
buoyed by broad buying of their U.S. peers after Intel Corp's
<INTC.O> chief executive said ageing personal computers and
Microsoft's launch of Windows 7 will prompt companies to start
spending on PCs next year. [ID:nL4249922]
                                
 But the benchmark Nikkei was trapped in a narrow 35-point
range with investors reluctant to trade, with U.S. markets closed
on Monday for a holiday and ahead of the settlement of Nikkei
futures and options on Friday.
                                
 The Nikkei was also helped by a positive start to Shanghai
trading <.SSEC>, which market players said investors had been
waiting for after China eased inbound investment rules on Friday.
"There are expectations of a lot more investment in China,
and if Asian markets recover, so does the Nikkei," said Noritsugu
Hirakawa, a strategist at Okasan Securities.
China announced new draft rules on Friday on inbound
portfolio investments, increasing the amount some institutions
can invest in the country's stock markets [ID:nPEK324660].
                                
 U.S. job losses were the smallest in a year last month,
coming in below forecasts at 216,000. But the unemployment rate
rose to 9.7 percent from 9.4 percent the month before, the
highest in 26 years and above expectations [ID:nN04159609].
                                
 The benchmark Nikkei <.N225> rose 103.67 points to 10,290.78
after hitting a five-week closing low on Friday.
                                
 The Nikkei lost 3.3 percent last week, and market players
said recovering to where its 25-day moving average comes in,
currently around 10,400, will be crucial for any further
recovery. It hit a high of 10,676 on August 31.
                                
 The broader Topix <.TOPX> rose 0.8 percent to 942.86.
                                
 EXPORTERS, CHIPS
                                
 The dollar edged up 0.2 percent to 93.11 <JPY=>. Investors
fret about a strong yen because it eats into exporter profits
when repatriated.
                                
"I think the biggest factor may be the yen's retreat against
the dollar, especially given that the greenback briefly broke
below 92 yen last week," said Hiroaki Osakabe, a fund manager at
Chibagin Asset Management.
                                
 "This is setting off short-covering, especially for
exporters."
                                
 Canon rose 3.2 percent to 3,580 yen, Sony Corp <6758.T>
gained 2.7 percent to 2,490 yen, and Toyota Motor Corp <7203.T>
rose 0.5 percent to 3,870 yen.
Advantest, a maker of chip-testing equipment, rose 1.8
percent to 2,315 yen, TDK Corp <6762.T> gained 2.3 percent to
5,420 yen and Tokyo Electron <8035.T> rose 1.4 percent to 4,990
yen. In the United States, the Philadelphia Semiconductor Index
<.SOXX> rose 2.7 percent to 309.74.
                                
 Toshiba Corp <6502.T> rose 3.7 percent to 483 yen on what
Chibagin Asset's Osakabe said was likely to be short-covering
after the stock fell on Friday on news it planned to bid for
French nuclear group Areva's <CEPF1.PA> power transmission and
distribution unit [ID:nT319639]
                                
 Two company sources said on Monday that Toshiba is in talks
with Singapore's Chartered Semiconductor <CSMF.SI> and
Globalfoundries Inc about outsourcing production of some of its
next-generation system chips to help cut costs. [ID:nT29806]
                                
 But Tokyo Dome Corp <9681.T> bucked the trend to fall 1.5
percent to 272 yen after the operator of a baseball stadium and
amusement facility said its first-half operating profit was
likely to be 21 percent below its previous estimate, hit by weak
sales at its hotel business.
                                
Trade slowed on the Tokyo exchange's first section, with 717
million shares changing hands, compared with last week's morning
average of 940 million.
                                
 Advancing shares outpaced declining ones by 933 to 565.