Nikkei Gains Ground

(Reuters) -- Japan's Nikkei share average rose in early trading Tuesday, continuing Monday's technical correction as investors picked up bargains after last week's flurry of aggressive selling, triggered by concern over a deepening euro crisis.

The Nikkei <.N225> climbed 0.9 percent to 8,709.86, while the broader Topix <.TOPX> stepped up 1 percent to 732.62.

Things are no better in Europe or China, but the current situation has been priced in, and now it's just short-covering, said Fumiyuki Nakanishi, general manager of investment and research at SMBC Friend Securities. But the upside is likely limited, with resistance around the five-day moving average of 8,726.

Renesas Electronics Corp (6723.T) recovered 6.3 percent after the Yomiuri daily reported that the troubled semi-conductor maker would cut 6,000 jobs and seek a 50 billion yen ($630 million) increase in capital after posting a 57 billion yen operating loss for the year just ended. Parent company Mitsubishi Electric Corp (6503.T) said it was prepared to offer support if needed, but that it had not yet been asked.

Nissan Motor Co Ltd (7201.T) advanced 2.8 percent after Kyodo reported that it planned to triple sales in Russia, doubling its share of the market there to 10 percent.

Other exporters were given a little breathing room as the yen held steady against the dollar and continued to ease against the euro. Nikon Corp (7731.T), Honda Motor Co Ltd (7267.T) and Toyota Motor Corp (7203.T) each put on between 1.3 and 1.8 percent, slightly outperforming the index.

Investors were also looking to the conclusion of a two-day Bank of Japan policy meeting beginning on Tuesday, although market consensus was that it would not introduce further easing measures beyond the expansion of its asset purchase programme announced on April 27.

Inaction has been priced into the market, but are they really going to sit pat when the situation in Greece and Spain has worsened since their last meeting? There's a possibility they could surprise again, Nakanishi said.