Nikkei gains as optimism spreads after Wall St rise

(Updates to midmorning)

TOKYO, Dec 3 (Reuters) - Japan's Nikkei average rose 1.5 percent on Wednesday as investors snapped up bargains such as Sony Corp and other beaten-down exporters on cautious optimism that things may start to improve on Wall Street.

But automakers bucked the rising trend, with Honda Motor Co down 4.4 percent in the face of a drop in U.S. sales and a report by the Nikkei business daily that it is scaling back its overseas expansion plans.

U.S. stocks rebounded on optimism after global bellwether General Electric pledged to leave its dividend intact, while financial shares gained on a Federal Reserve move to extend several emergency measures integral to stabilising banks.

Additional encouragement came after U.S. automakers submitted survival plans and a top lawmaker predicted Washington would approve a bailout, saying that bankruptcy was not an option.

"Expectations for a bailout for the Big Three automakers boosted Wall Street, and with Citigroup also basically taken care of, the safety net appears to have been spread," said Takashi Ushio, head of the investment strategy division at Marusan Securities.

"Of course all the worries haven't been completely erased, but it appears as well that markets have become more resilient in the face of bad news than they were a few months ago."

Other market players said the fact that the dollar was hovering around 93 yen would keep gains limited.

The benchmark Nikkei gained 120.84 points to 7,984.53 yen after falling 6.4 percent on Tuesday, while the broader Topix rose 1.3 percent to 797.03.

The optimism was underlined by the fact that orders placed through 12 foreign brokerages prior to the start of trade showed that foreign brokers were set to buy Japanese shares, albeit by a slim margin, for only the second time in nearly a month.

But bad news took a toll on several sectors despite the broad buying.

Honda fell 4.4 percent to 1,804 yen and Toyota Motor Co was down 1.2 percent at 2,790 yen after U.S. monthly auto sales in November plunged 37 percent to the lowest level since 1982, data released on Tuesday showed.

U.S. sales for Toyota dropped 34 percent, Honda fell 32 percent, Ford Motor Co was off 31 percent, Nissan Motor Co tumbled 42.2 percent and Chrysler LLC sales fell 47 percent.

Steel makers slipped as well after the Nikkei business daily reported that top Japanese steelmakers are considering temporarily shutting down blast furnaces as early as this month in a move to cope with falling demand.

JFE Steel Corp, the core unit of JFE Holdings, is considering shutting down some of its seven blast furnaces in Kurashiki and Fukuyama in western Japan, possibly on a rotating basis, the Nikkei said, while Kobe Steel is deciding whether to shut down one of its three furnaces in western Japan.

The shutdowns may be for two or three days, the paper said.

JFE Holdings was down 0.5 percent to 2,095 yen and Nippon Steel Corp, which the Nikkei said may extend the suspension of a blast furnace in western Japan, fell 1.1 percent to 267 yen.

Canon Inc rose 1.7 percent to 2,685 yen, while Sony edged up 0.8 percent to 1,765 yen. (Reporting by Elaine Lies; editing by Sophie Hardach)