(Updates with details, stocks)
By Elaine Lies
TOKYO, May 19 (Reuters) - Japan's Nikkei stock average
clawed up 0.1 percent on Monday as near record-high oil prices
boosted Mitsubishi Corp <8058.T> and other trading houses, with
other energy-related shares also climbing.
Nippon Steel Corp <5401.T> and other steelmakers rose after
fresh media reports that Toyota Motor Corp <7203.T> had agreed
with it and other steelmakers to pay more for sheet steel.
But banks dragged on the market, tracking a fall in their
U.S. peers after Merrill Lynch downgraded two large regional
U.S. banks, citing a bleak outlook for such banks, while
profit-taking kicked in across the board after last week's
gains, which saw the Nikkei have its strongest week in three
months.
Oil rose on Monday, extending last week's climb that saw
prices jump to a record high near $128 a barrel over concerns
about tight fuel supply [], and market players said this was
boosting stocks despite its potentially negative long-term
implications.
"It's basically all just commodities today, with the market
ignoring the long-term implications of the high oil prices such
as inflation, even though oil is really approaching dangerous
levels," said Koichi Ogawa, chief portfolio manager at Daiwa SB
Investments.
"Otherwise, with the bulk of company earnings out and few
economic indicators to watch for, the market doesn't really have
too many catalysts this week," he said.
Others said that with trading volume likely to drop off a
bit and investors divided on the Nikkei's long-term direction,
movements could be exaggerated.
"People are divided pretty strongly into two camps -- those
who think the market got a bit overheated last week and is ready
for some downward adjustment, and those who are still going
strong," said Masayoshi Okamoto, head of dealing at Jujiya
Securities.
"Because of this, we may see moves as extreme as 200 points
up one day and 200 points down the next. But overall, it's
likely to be directionless this week," he said.
The benchmark Nikkei <> eked out a gain of 13.92 points
to 14,233.40. The broader Topix <> was up 0.2 percent at
1,399.05.
TRADING HOUSES FIRM
Trading houses led the Nikkei higher, with Mitsubishi -- the
nation's largest such company -- up 4.1 percent at 3,840 yen and
Mitsui & Co Ltd <8031.T> climbing 4.4 percent to 2,730 yen.
Itochu Corp <8001.T> jumped 4.9 percent to 1,316 yen.
Oil and gas field developer Inpex Holdings Inc <1605.T>
surged 4.5 percent to 1.39 million yen.
Nippon Steel climbed 2.9 percent to 675 yen and JFE Holdings
Inc <5411.T> rose 1.2 percent to 6,100 yen.
But banks slid in the wake of the Merrill Lynch downgrade of
U.S. banks KeyCorp <KEY.N> and Regions Financial Corp <RF.N>
that sent an S&P index of financial shares <.GSPF> down 1.4
percent.
Mitsubishi UFJ Financial Group <8306.T> was down 1.5 percent
at 1,074 yen and Sumitomo Mitsui Financial Group <8316.T> slid
1.6 percent to 862,000 yen.
Exporters were mixed, with Canon Inc <7751.T> edging up 0.9
percent to 5,620 yen, while Honda Motor Co Ltd <7267.T> was down
2.6 percent at 3,390 yen, becoming the biggest drag on the
Nikkei 225 by volume weight.
Trade was modest on the Tokyo exchange's first section, with
952 million shares changing hands, almost in line with last
week's morning average.
Advancing stocks beat decliners by 891 to 695.
(Reporting by Elaine Lies; Editing by Chris Gallagher)
