Nikkei bounces after sharp fall, investors still wary as earnings eyed
* Nikkei rises 1 pct, Topix up 0.8 pct
* Gains follows sharp fall on Fri, investors remain cautious
* Earning results so far have been disappointing
* JFE falls after no upward revision to earning
* Mitsubishi Motors up on dividend hopes after capital raising news
TOKYO, Oct 28 (Reuters) - The Nikkei stock average bounced back on Monday, recouping some of its steep losses suffered at the end of last week, but investors remain cautious ahead of a big earnings week for Corporate Japan and concerns over tight credit conditions in China. The benchmark Nikkei gained 1 percent to 14,225.98, recovering after its 2.8 percent fall to a 2-1/2 week low of 14,088.19 on Friday. The yen softened against the dollar, providing some relief to exporters. It was last quoted at 97.48 yen. The U.S. S&P 500 ending at another record high on Friday also helped underpin Tokyo stocks. The Nikkei shed 4.3 percent in the last three sessions, hit mainly by concerns about tight credit conditions in China, a major export market for Japan. "The market is getting bought back after excessive selling on Friday... I don't think we will be testing new highs," said Kenichi Hirano, strategist at Tachibana Securities. "This will end when all the short-covering is over. The Nikkei won't make it above 14,500." Investors remain reluctant to chase the market aggressively as they await a further batch of earnings this week, with results so far failing to impress. JFE Holdings Inc slid as much as 4 percent after Japan's No.2 steelmaker on Friday left its full-year profit forecast unchanged, which was 25 percent below analysts' expectations, citing slack overseas markets and extra spending to upgrade facilities. "Expectations of upward earning revisions were one big driver for Japanese shares but the earning season got off to a bad start," said Tachibana's Hirano. Still, Hirano said there are hopes for more positive earnings announcements in the days ahead. Companies such as KDDI Corp, Komatsu Ltd and Hitachi Construction Machinery Co Ltd are due to report their results after the market shuts on Monday. KDDI climbed 3.8 percent after the Nikkei newspaper said the mobile carrier will likely report a record first-half operating profit of about 340 billion yen ($3.5 billion) for the April-September period, up 50 percent on the year. Mitsubishi Motors Corp jumped as much as 4.9 percent on the news that the carmaker plans to raise around $2 billion in a public share offering as early as January to pay back top shareholders for a 2004 bailout that enabled its decade-long turnaround. 1/8ID: nL3N0IG025 3/8 Hopes that the capital raising will also allow Mitsubishi to pay dividends for the first time in nearly 15 years eclipsed concerns over dilution. Analysts at Nomura said the Japanese market is likely to be supported on its attractive valuations. "A particularly important point is that Japanese stocks are again trading at a P/E discount versus U.S. stocks," they wrote in a report to clients on Friday, noting that the P/E ratio for the TOPIX is 14.3, compared to 15.1 for the S&P 500. The broader Topix added 0.8 percent to 1,187.62 in relatively light trade, with volume at 27.9 percent of its full daily average for the past 90 trading days.