Nikkei inches up in choppy trade

Snapped a six-session losing streak, its longest since early April

Japan's Nikkei share average edged up on Friday to snap a six-session losing streak, its longest since early April, after Chinese growth data matched expectations, slightly easing fears about the state of the global economy.

But investor appetite for risk remained low, with the Nikkei seesawing through the day as gains in defensive stocks such as food and healthcare companies vied with losses in cyclical shares pressured by broad economic concerns.

"Basically the market will be risk averse until the mid- and long-term investors see significant improvements for the two major problems: the euro and slowing growth in China," said Makoto Kikuchi, CEO of Myojo Asset Management.

The Nikkei crept up 0.1% to 8,724.12 after China reported a 7.6% increase in growth in the second-quarter, its slowest pace in three years, but in line with forecasts.

The country's industrial output also matched predictions, boosting construction machinery makers Komatsu Ltd<6301.T> by 1% and rival Hitachi Construction<6305.T> by 1.3%.

"If the Chinese economy showed signs of improvement and people could be assured that Europe isn't going to drag down the global economy then I think we'd be on course for a recovery," said Hideyuki Fukunaga, CEO of Investrust.

"Even if the data doesn't get better there's still plenty of room for rate cuts to assuage the markets."

Concern about slowing growth in China and the United Sates and worries about the impact of the euro zone debt crisis wrested the Nikkei off its July 4 two-month high, while warnings about underpar revenue in the past few days have left it 3.3% down on the week, its biggest weekly loss since early April.

The benchmark index is also on shaky technical ground after breaking major support at its 25-day moving average on Thursday.

"There's ample liquidity but when the macro is so bad, are you the first guy who steps into the pool or are you waiting for other guys to start buying?" said a foreign hedge fund manager.

Investors are now looking to earnings season, which begins in Japan at the end of next week, for clues on whether bad global data will begin to bleed into company profits and leave revenues languishing below guidance for the second quarter.

The broader Topix index closed 0.2% lower at 746.24.

Getting defensive

Investors continued to opt for stocks with less exposure to broad economic cycles, with food companies rising 0.5%, while builders, the main beneficiary of post-disaster reconstruction in Japan, moved up 1%.

"Buying in exporters' shares has stopped for some time. Investors will likely continue to buy defensive shares," said Hideyuki Ishiguro, assistant manager of investment strategy at Okasan Securities.

On top of mounting worries that slower growth in top economies such as China will lead to more profit warnings, Moody's downgrade of Italy also rekindled worries about Europe, which had been on the back burner for the last few days.

Dentsu, Japan's biggest marketing company, fell 7% after unveiling a plan to buy British group Aegis for 3.2 billion pounds, with investors concerned the purchase would require a bank loan or lead to share dilution.