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Nikkei rises as retail buyers snap up small caps, but institutions wary

* Nikkei rises 0.4 pct, Topix up 0.4 pct

* Retail investors' buying lift small-to-mid caps

* BOJ meeting, Yellen testimony and earnings eyed

TOKYO, July 14 (Reuters) - Japan's Nikkei average rose modestly on Monday, ending its longest losing streak since the current "Abenomics" rally started in November 2012, as retail investors picked up shares of small- and medium-sized companies. The benchmark Nikkei gained 0.4 percent to 15,221.56 points by the midday break and looked poised to snap a five-day slide, after euro zone banking jitters faded and lifted Wall Street shares on Friday. But many institutional investors stayed on the sidelines ahead of a barrage of events this week, leaving domestic retail traders the main players of the day. "We are in the midst of summer, prior to key policy meetings and speeches, earnings and Chinese data -- all those things together make for a very low volume, directionless, low conviction market," said Stefan Worrall, director of equity cash sales at Credit Suisse in Tokyo. The Bank of Japan will kick off a two-day policy meeting on Monday. The central bank is widely expected to leave monetary policy unchanged though it may trim its economic growth estimates due to soft exports and a slump on consumer spending after an April 1 sales tax hike. Investors' focus will also be on congressional testimony by Federal Reserve Chair Janet Yellen, scheduled for Tuesday and Wednesday, and corporate earnings season, both in the U.S. and Japan. China will release second-quarter GDP data on Wednesday which investors will scour for signs of whether the economy is stabilizing. U.S. stocks and other major global equities edged higher and the yen stabilized against the dollar on Friday as worries about Portugal's biggest bank ebbed, while oil prices dropped on easing concern about supply losses in the Middle East.

"Retail investors were buying small caps," said Yasuo Sakuma, portfolio manager at Bayview Asset Management. While large-cap shares saw limited price moves, the Mothers index, which comprises smaller growing companies, rose 0.9 percent. Shares popular among day traders made hefty gains, with game-maker Colopl Inc jumping 5 percent, PeptiDream Inc , a bio-tech company, rising 1.3 percent, and a Cyberdyne Inc, manufacturer of robot, gaining 2.2 percent, in heavy trade. On the main board, index heavyweight SoftBank Corp was the most traded stock, climbing 1.6 percent after the Nikkei business daily said the mobile carrier has reached a basic agreement to acquire T-Mobile US Inc from German Deutsche Telekom AG, paving the way for the merger between T-Mobile and Sprint Corp. Sharp Corp gained 1.3 percent following media reports that the struggling electronics maker was looking to buy smartphone panel production facility at its Kameyama plant from Apple Inc for some 30 billion yen. Tsugami Corp jumped 3.9 percent after the Nikkei newspaper said the precision machinery maker's operating profit for the April-June quarter was likely to soar by 380 percent. Toho Co Ltd advanced 3.1 percent after Japan's biggest film distributor announced a robust March-May earnings thanks to a smash hit of "Frozen". The broader Topix added 0.4 percent to 1,259.73 in light trade, while the JPX-Nikkei Index 400 rose 0.3 percent to 11,455.48.

(Editing by Kim Coghill)