Japan's Nikkei rises as US economic worries recede

By Junko Fujita

TOKYO, Aug 6 (Reuters) - Japan's Nikkei share average gained on Wednesday, as concerns about the U.S. economy receded, prompting investors to continue buying cheap stocks after a heavy sell-off earlier this week.

The Nikkei .N225 rose 0.6% to end the day at 40,794.86.

The broader Topix .TOPX jumped 1% to 2,966.57.

"Investors bought stocks because the gains of the Nikkei in the previous session were not enough to recoup declines on Monday," said Naoki Fujiwara, a senior fund manager at Shinkin Asset Management.

Japanese shares slid the most in two months on Monday as concerns mounted over the U.S. economy and trade, while speculation grew over a potential upheaval in domestic politics.

"It is just the declines of heavyweight stocks that are dragging the index today," said Fujiwara.

Tokyo Electron 8035.T slumped 3.8% to weigh the most on the Nikkei. Mizuho Securities analysts downgraded the rating of the chip-making equipment maker to "Neutral" from "Buy".

Mitsui Fudosan 8801.T leapt 5.9% after the property developer's quarterly net profit nearly doubled from a year ago.

Mitsubishi Heavy Industries 7011.T rose 4.8%, jumping for a second session, after the heavy machinery maker clinched a landmark deal to build Australia's next-generation warships.

Of more than 1,600 stocks trading on the Tokyo Stock Exchange's (TSE) prime market, 79% rose, 18% fell and 3% traded flat.

All but one of the TSE's 33 industry sub-indexes rose, with the property sector .IRLTY.T climbing 2.8% to be the top performer.

The services sector .ISVCS.T slipped 0.9%, dragged by a 4.4% drop for Recruit Holdings 6098.T.