Nikkei ends up 0.9 pct, Lehman moves in focus

*Nikkei ends up 0.9 pct, after 6-month closing low Thursday

*Bank shares rise on news Lehman Brothers in talks for sale

*Noritz surges after U.S. hedge fund's buyout offer (Adds stocks and comments)

By Taiga Uranaka

TOKYO, Sept 12 (Reuters) - The Nikkei average rose 0.9 percent on Friday, with financial shares such as Mitsubishi UFJ Financial Group (8306.T: Quote, Profile, Research, Stock Buzz) gaining sharply following news that U.S. investment bank Lehman Brothers (LEH.N: Quote, Profile, Research, Stock Buzz) was in talks about a possible sale.

Noritz Corp (5943.T: Quote, Profile, Research, Stock Buzz) surged 10.3 percent after U.S. hedge fund Steel Partners offered to buy out the gas and water heater maker.

The market went through a roller-coaster ride ahead of a three-day weekend, dipping into negative territory briefly as investors hurried to lock in profits amid uncertainty over the U.S. financial sector and the global economic outlook.

Japanese markets will be closed on Monday for a national holiday.

"Investors were waiting to see what would happen to Lehman," said Hiroyuki Nakai, chief strategist at Tokai Tokyo Research Center.

Market participants said it would be positive for the market if some definite moves are made to save Lehman in its struggle for survival, but they cautioned it would not put an end to the turmoil in the U.S. financial sector.

"The credit worries will linger. They will not end with Lehman, there are more to come," said Yukio Takahashi, market analyst at Shinko Securities.

The benchmark Nikkei average .N225 ended up 112.26 points at 12,214.76. The index ended almost flat for the week.

The broader Topix gained 1.3 percent to 1,177.20.

Lehman and U.S. regulators were in intensive discussions about a number of options, including a complete sale, but the firm was resisting government intervention, a source with direct knowledge of the talks said. [ID:nN09324233]

BANKS UP

Japan's biggest banks rose, capping a highly volatile week that saw their shares jump more than 10 percent on Monday following the U.S. government's seizure of Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz).

Mitsubishi UFJ, Japan's top bank, gained 4.3 percent to 858 yen, while No.2 Mizuho Financial Group (8411.T: Quote, Profile, Research, Stock Buzz) jumped 5.2 percent to 468,000 yen.

Chip-equipment maker Tokyo Electron Ltd (8035.T: Quote, Profile, Research, Stock Buzz) rose 4.9 percent to 6,040 yen, becoming the biggest contributor to the Nikkei.

Shares of Noritz jumped to 1,072 yen, after Steel Partners offered to buy out the gas and water heater maker for 42.3 billion yen, its latest bid to squeeze higher returns out of its investments in Japan. [ID:nT337772]

Trade volume jumped on the Tokyo exchange's first section, as is typical on days when the settlement price is determined for index futures and options.

Some 2.59 billion shares changed hands, compared with last week's daily average of 1.91 million.

Nikkei futures and options contracts expiring in September settled at 12,295.55, the Osaka Securities Exchange said after the close.

The closely watched settlement price is calculated from the opening prices of the 225 shares in the Nikkei average on the second Friday of the month.

Advancing stocks outpaced declining ones by a ratio of nearly 3 to 1. (Editing by Chris Gallagher)