Nikkei gains 2.7 pct to cut 3-day losing streak

* Nikkei up 2.7 pct on short-covering, ends 3-day losing run

* Nikkei down 1.4 pct on the week

* Worries about economy and market volatility cloud outlook

* Outcome of the G20 summit eyed (Adds details)

By Aiko Hayashi

TOKYO, Nov 14 (Reuters) - The Nikkei average rose 2.7 percent on Friday, snapping a three-day losing run, as a rally in U.S. stocks triggered short-covering, with investors picking up beaten-down shares such as industrial robot maker Fanuc (6954.T: Quote, Profile, Research, Stock Buzz).

But the market lost steam after the benchmark rose more than 5 percent in morning trade, as the yen edged up against the dollar and U.S. stock futures SPc1 remained in negative territory, suggesting a lower open for the U.S. market.

"The market rose on short-covering after falling sharply yesterday, but investors started closing positions ahead of the weekend," said Yutaka Miura, a senior technical analyst at Shinko Securities.

"Investor hopes that some sort of measures may come out of the (G20) summit are supporting the market, but it's not something that can spark active buying now."

Leaders of the Group of 20 developed and emerging nations gather in Washington on Friday and Saturday to discuss steps to address the financial crisis. [ID:nG7G8]

Fumiyuki Nakanishi, manager at SMBC Friend Securities, said individual investors and public funds would likely come in to buy on dips, if no specific steps came out of the summit and the Nikkei were to break below the 8,000 mark.

The benchmark Nikkei average .N225 added 223.75 points to finish at 8,462.39, ending a three-day losing streak in which it lost more than 9 percent. For the week, it fell 1.4 percent.

The broader Topix index .TOPX added 1.1 percent to 846.91.

The dollar fell 0.6 percent to 97.10 yen , after having jumped as high as 98.30 yen on Thursday from the lows below 95 yen touched earlier during that day.

Despite the day's gains, the outlook for the Tokyo share market remained clouded by concerns about a global recession and the turmoil and volatility in financial markets.

"People are still taking a wait-and-see approach," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management Co Ltd.

"U.S. shares have been very volatile, moving 1,000 points in a day, which is abnormal. This is not a normal situation, and so there are concerns that come next week there could be another decline."

U.S. stocks surged on Thursday and broke a three-day losing streak after the S&P 500 and Nasdaq touched new five-year lows earlier in the session, prompting investors to put aside worries about the flagging economy and step in to hunt for bargains. [.N]

EXPORTERS REBOUND

Investors picked up beaten-down shares such as exporters.

Fanuc jumped 5.4 percent to 5,640 yen. Advantest Corp (6857.T: Quote, Profile, Research, Stock Buzz), the world's No. 1 maker of chip testers, shot up 9.1 percent to 1,278 yen, while Canon Inc (7751.T: Quote, Profile, Research, Stock Buzz) rose 2.3 percent to 2,915 yen.

Honda Motor (7267.T: Quote, Profile, Research, Stock Buzz) gained 3.2 percent to 2,110 yen.

Toyota Motor (7203.T: Quote, Profile, Research, Stock Buzz) added 2 percent to 3,140 yen after the Nikkei business daily reported Toyota, facing a deep slump in the U.S. auto market, is considering postponing the start of production at a plant it is building in Mississippi until 2011 or later. [ID:nT271517]

A Toyota spokesman said nothing had been decided.

Among other notable stocks, Kubota Corp (6326.T: Quote, Profile, Research, Stock Buzz) climbed 6.4 percent to 551 yen after Nomura Securities lifted its rating on the stock to "buy" from "neutral", saying the company's earnings are likely to remain firm through March 2010.

Shares of Nintendo Co (7974.OS: Quote, Profile, Research, Stock Buzz) jumped 5.8 percent to 30,200 yen after the Japanese video game maker said it sold 803,210 Wii video game consoles in the United States in October, continuing its lead with the country's best-selling video game console. [ID:nN13388775]

But Isetan Mitsukoshi Holdings (3099.T: Quote, Profile, Research, Stock Buzz) fell 1.6 percent to 818 yen after Japan's largest department store operator cut its annual profit outlook and said it will slash prices as it braces for an economic slump it reckons could last two years. [ID:nT242117]

Trade was light on the Tokyo exchange's first section, with 2.1 billion shares changing hands, compared with last week's daily average of 2.55 billion.

Advancing shares outpaced declining ones 955 to 638. (Additional reporting by Masayuki Kitano; Editing by Chris Gallagher)