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Nikkei climbs after Softbank-Sprint talks weaken the yen

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* Nikkei up 0.3 pct; Topix advances 1 pct

* Softbank slumps 15.3 pct, in talks to invest in SprintNextel

* Fast Retailing sinks 9.7 pct after disappointing results

By Dominic Lau

TOKYO, Oct 12 (Reuters) - Japan's Nikkei edged higher onFriday, moving off its lowest close in more than two months, asthe yen slipped against the dollar after wireless serviceprovider Softbank Corp

said it was in talks to investin U.S. firm Sprint Nextel.

A source has said Softbank is eyeing a controlling stake inSprint worth more than 1 trillion yen ($12.8 billion) and thetalks have also spurred speculation that the Japanese firm couldalso make a run at other companies via Sprint, potentiallycosting 2 trillion yen.

Softbank

slid 15 percent as investors wereconcerned its overseas expansion would be too costly and have nosynergy with its Japanese business.

"In some sense, (Softbank Chairman Masayoshi Son) hasactually weakened the yen. The market's gone up, his stock'sdone down," a sales trader at a foreign bank said.

"It's a huge deal. Often when the market turns, it oftencomes from big M&A."

Gains for the Nikkei were also capped by a near 10 percentslump in Fast Retailing

after its results disappointed.

The Nikkei

climbed 0.3 percent to 8,572.70, on trackto snap a four-session losing streak but was still down 3.3percent for the week, which would be a fourth straight week oflosses.

Amid concerns that the upcoming quarterly earnings seasonwill be quite weak due to sluggish global growth, the benchmarkhas fallen 7.7 percent since hitting a four-month high on Sept.19 though it is up 1.4 percent this year.

Softbank's stock slid to a more than four-month low and wason track to post its biggest one-day percentage drop since 2003.The stock was the most-traded on the main board by turnover.

Softbank's rival, KDDI Corpadvanced 3.3 percentand was the fourth-most traded stock on the main board.

The softer yen, which was quoted at 78.49 yen to the dollar,down from Thursday's high of 77.94, helped exporters.

Toyota Motor Corp, Canon Incand TDK Corp

were up between 1.9 and 2.5 percent.

Fast Retailing was the second-most traded issue after itsfull-year operating profit ended August came in below marketexpectations, while investors were also disappointed with itsearnings guidance for this business year.

The broader Topix

advanced 1 percent to 720.85.

Data from Japan's Ministry of Finance showed foreigninvestors turned net buyers of Japanese stocks last week aftertwo weeks of net selling.

(Editing by Edwina Gibbs)

((dominic.lau@thomsonreuters.com)(+81 3 6441 1917)(ReutersMessaging:)(dominic.lau.thomsonreuters.com@reuters.net))

Keywords: MARKETS JAPAN STOCKS/