Japanese shares end flat on optimism for corporate outlook

TOKYO, May 16 (Reuters) - Japanese shares recouped early losses to end flat on Friday, as stronger-than-expected domestic earnings prompted investors to overlook a stronger yen and pour more money into stocks.

The Nikkei .N225 ended flat at 37,753.72, after falling as much as 0.73% earlier in the session on a stronger yen. The index rose 0.67% for the week in its fifth straight week of gains.

The broader Topix .TOPX also reversed course, inching up 0.05% at 2,740.45 and inched up 0.2% for the week.

"The market bought back stocks on optimism of corporate outlook after a series of stronger-than-expected earnings," said Shoichi Arisawa, general manager at the investment research department at IwaiCosmo Securities.

"And more-than-expected announcements for share buybacks is very positive to the market."

The Nikkei had reclaimed the psychologically important level of 38,000 earlier this week on hopes that a Japan trade deal could be on the cards after a tariff truce between the U.S. and China.

But since then, the market has drifted lower as a lack of clarity on trade negotiations crimped gains.

Among individual stocks, Mitsubishi UFJ Financial Group 8306.T ended 0.88% higher after announcing a share buyback worth about 250 billion yen ($1.72 billion).

However, its peers Sumitomo Mitsui Financial Group 8316.T and Mizuho Financial Group 8411.T fell 1.59% and 1.97%, respectively, even as the three banking groups posted record annual net profits in the last financial year.

Seiichi Suzuki, chief equity market analyst at Tokai Tokyo Intelligence Laboratory, said Japanese firms are set to buy back as much as 8.5 trillion yen worth of shares in April and May alone, helping the index's further rises.

Phone company KDDI 9433.T rose 1.27% after it said it would buy back up to 400 billion yen of shares.

Chip-related Tokyo Electron 8035.T and Advantest 6857.T fell 2.76% and 1.89%, respectively, to weigh on the Nikkei the most.

($1 = 145.1300 yen)