(Adds stocks, details)
*Tankan survey gives boost, but longer-term outlook clouded
*Steelmakers dip after agreeing to price hike
*Nikkei on track to snap eight-day losing streak
By Elaine Lies
TOKYO, July 1 (Reuters) - Japan's Nikkei stock average rose
0.3 percent on Tuesday, buoyed by a better than expected business
mood survey, with Mitsubishi Corp <8058.T> and other trading
houses rising after oil hit a new record high.
Nippon Steel Corp <5401.T> and JFE Holdings Inc <5411.T>
edged down after saying they had agreed with global miner Rio
Tinto <RIO.AX><RIO.L> to pay nearly double the previous price for
Australian iron ore, and banks were shaky after their U.S. peers
slid on renewed credit worries.
Confidence among big Japanese manufacturers fell to a
five-year low in June, the Bank of Japan's tankan survey showed,
though the fall was less than expected, helping push up shares.
But market players said the gains from this would be
temporary at best.
"People had been expecting the tankan to be terrible, so when
it turned out better than expected, it helped the Nikkei rise,"
said Takashi Ushio, head of the investment strategy division at
Marusan Securities.
"But when they calmed down and took a good look at it, it
showed that sentiment has really chilled. So that will keep the
Nikkei from rebounding as it otherwise might."
The Dow <> ended flat on Monday, and this also helped
support the Nikkei, as did the sense that Japanese shares were
due for a rebound after an eight-day losing streak that saw the
market lose roughly 6.7 percent.
"There's a sense that Japanese shares are now easy to buy,"
said Yoku Ihara, manager at Retela Crea Securities.
The benchmark Nikkei <> gained 45.15 points to
13,526.53, while the broader Topix <> was up 0.5 percent at
1,326.76.
OIL, STEEL, BANKS
Oil surged to a record high of $143.67 on Monday before
settling at $140 a barrel <CLc1>. It stood at $140.48 at 0218
GMT.
Trading houses climbed in response, with Itochu Corp <8001.T>
jumping 3.5 percent to 1,171 yen, becoming one of the biggest
percentage gainers on the Nikkei 225. It was followed closely by
Mitsubishi Corp, which gained 2.9 percent to 3,600 yen and Sojitz
Corp <2768.T>, which rose 3.4 percent to 366 yen.
Steelmakers slipped, but market players said the long-term
impact of the iron ore price hike might not necessarily be
negative.
"This will certainly add to costs, but this would also allow
steelmakers to raise their prices, so that once they've absorbed
the news of the ore hike the outlook may not be so bad,"
Marusan's Ushio said.
JFE Holdings shed 1.1 percent to 5,290 yen while Nippon Steel
slid 0.7 percent to 571 yen.
Megabanks slid after renewed credit worries hit their U.S.
peers following negative analyst reports predicting that Merrill
Lynch <MER.N> will be forced to raise equity in the third
quarter.
Mizuho Financial Group <8411.T> was down 0.4 percent at
494,000 yen, Mitsubishi UFJ Financial Group <8306.T> slipped 0.2
percent to 939 yen and Sumitomo Mitsui Financial Group <8316.T>
fell 1.6 percent to 786,000 yen.
Trade picked up on the Tokyo exchange's first section, with
913 million shares changing hands, compared with last week's
morning average of 848 million.
Advancing stocks beat declining ones by 952 to 616.
(Editing by Brent Kininmont)
