* Nikkei flat in thin trade as China worries weigh
* Automakers surge after Honda, Nissan eke out surprise gains
* Traders, smelters hit after oil, metals price fall
By Elaine Lies
TOKYO, July 30 (Reuters) - Japan's Nikkei stock average was
flat on Thursday, with caution after a Chinese stock tumble
offsetting a surge for Honda Motor Co <7267.T> and Nissan Motor
Co <7201.T> on surprise quarterly profits.
Shanghai shares <> fell 5 percent on Wednesday, their
biggest daily decline in eight months, on concerns that
authorities might take measures to cool the 80-percent gain in
Shanghai shares this year [].
Though Shanghai stocks recouped some losses on Thursday,
rising 1.7 percent, dealers said wariness remained.
"Though the Nikkei initially jumped a bit in response to a
weaker yen, yesterday's falls in Asian shares as well as Wall
Street are definitely a concern," said Yutaka Miura, chief
technical analyst at Mizuho Securities.
"There's a sense that perhaps the July rally in global stocks
may be coming to an end."
Wall Street fell on worries that China might be ready to hit
the brakes on lending, a move that could curb demand and hinder a
global economic recovery, with commodity prices and shares in the
energy and raw materials sectors hit hard. []
But others said China was mainly being used as an excuse for
profit-taking while investors waited for fresh buying signals.
"China needs to produce growth of around 8 percent this year,
they aren't going to adopt any policies that could really put the
economy at risk," said Takashi Ushio, head of the investment
strategy division at Marusan Securities.
"Even if China's stock market does fall back a bit, it's
unlikely to have a huge impact. Investors are using this as a
reason to lock in profits after the Nikkei rose so much."
The Nikkei on Tuesday snapped a nine-day rising streak, its
longest since 1988.
In comments reported on Thursday, the vice governor of
China's central bank said the bank will "unswervingly" stick to an
appropriately loose monetary policy and will use market tools not
quota controls. [].
The benchmark Nikkei <> rose 3.25 points to 10,116.49 in
thin trade, while the broader Topix <> was also flat.
Some analysts said that the Nikkei, like overseas markets,
had risen in expectation that earnings would be good and that the
actual results had been mostly factored in.
Japan's earnings season hits its peak on Thursday and Friday.
Among firms due to announce later on Thursday are Sony Corp
<6758.T> and Fujitsu Ltd <6702.T>.
AUTOS STRONG, COMMODITIES FALL
"Look at Wall Street -- it's down now that results are over,
even though they were good. There's no real reason to buy," said
Mizuho's Miura.
But few felt the Nikkei was headed for a major correction,
with 10,000 increasingly seen as solid support after the Nikkei
closed above it for three straight days earlier this week.
Figures showing industrial output rose 2.4 percent in June
from May had little impact since they were in line with market
expectations, analysts said.
Honda shot up 8.1 percent to 2,995 yen and Nissan advanced
7.5 percent to 678 yen after both made small surprise profits
last quarter, though a sustained recovery appeared elusive with
demand relying largely on government stimulus. []
The news helped boost industry leader Toyota Motor Corp's
<7203.T> shares by 3.4 percent to 3,930 yen. The transport
equipment subindex <.ITEQP.T> climbed 4.1 percent to become the
biggest gainer among the subindexes.
But trading houses and smelters were hit after oil and metals
fell sharply on Wednesday, although off earlier lows by midday.
Copper, zinc and aluminium fell to near their 5 percent
downside limits on Wednesday, tracking falls in Chinese stocks.
Mitsubishi Corp <8058.T>, Japan's largest trading house,
slipped 2.6 percent to 1,775 yen and fellow trader Mitsui & Co
<8031.T> lost 2.7 percent to 1,139 yen.
Smelter Sumitomo Metal Mining <5713.T> fell 5.2 percent to
1,373, with fellow smelter Dowa Holdings <5714.T> down 2.9
percent to 409 yen.
Trade was light on the Tokyo exchange's first section, with
866 million shares changing hands, compared with last week's
morning average of 1 billion.
Declining stocks outnumbered advancing ones by more than 2 to
1.
(Reporting by Elaine Lies; Editing by Edwina Gibbs)
