Nikkei gains as China hopes, Kyocera offset Panasonic

* Nikkei up 7.6 pct on week, best week in a month

* Nikkei loses 0.75 pct in November, best month since May

* Shippers and trading firms rise on China hopes

* Panasonic tumbles on outlook cut, Kyocera soars on buyback

* Market players gloomy long-term, rises seen limited (Adds stocks, details)

By Elaine Lies

TOKYO, Nov 28 (Reuters) - Japan's Nikkei average climbed 1.7 percent on Friday for its best week in a month on strengthening expectations that an aggressive Chinese interest rate cut may fight a slowing economy there, boosting shippers and trading houses. Electronic parts maker Kyocera Corp (6971.T: Quote, Profile, Research, Stock Buzz) soared 17 percent on a share buyback, countering an 11 percent tumble by Panasonic Corp (6752.T: Quote, Profile, Research, Stock Buzz) after the plasma TV maker slashed its outlook, but otherwise bargain-hunting dominated in thin trade.

Though U.S. markets were closed on Thursday for a holiday, four consecutive days of rises for the Dow were also underpinning sentiment, despite a fresh deluge of bad domestic economic data.

"Reassurance is spreading among investors based on four days of rises by the Dow and the China rate cut, which brings hope that the slowing of its economy may be stopped," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

"But economic fundamentals, especially in Japan, are bad, and the bear market sentiment continues. This is just a temporary break for the bear market."

The benchmark Nikkei .N225 gained 138.88 points to 8,512.27, its highest close in over a week, while the broader Topix .TOPX was up 0.7 percent to 834.82.

The Nikkei climbed 7.6 percent on the week for its best weekly performance in a month. It lost 0.75 percent in November, its best month since May.

A monthly Reuters survey found that Japanese retail investors became slightly less pessimistic about domestic equities in November, seeing some buying opportunities in undervalued stocks after three months of record-low investor sentiment. [ID:nT175967]

Industrial production dropped sharply in October and manufacturers warned of record falls in coming months, with household spending also falling. [ID:nT133784]

But market players shrugged off the gloomy news as expected and said their focus was turning to Friday's launch of the Christmas sales season in the United States.

DARK CHRISTMAS?

"In 2002, Christmas sales were poor, which meant U.S. stocks didn't rise the way they usually would before the end of the year," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.

"The same thing could well happen this year, with a knock-off effect on the Nikkei," he added.

He forecast a Nikkei rise for the rest of the year to 9,400 at best. The Nikkei closed at 15,307.78 for 2007.

Panasonic, the world's No.1 plasma TV maker, dived 10.9 percent to 1,144 yen after cutting its annual net profit forecast by 90 percent and announcing plans to restructure as the global financial crisis dampens sales of TVs and other electronics. [ID:nLR132843]

But Kyocera climbed 17.3 percent to 5,960 yen after saying on Thursday it will buy back up to 38 billion yen worth of its own shares, or 4.2 percent of those outstanding.

On Wednesday, China cut interest rates by the biggest margin in 11 years, and the European Union plotted a 200 billion euro ($257.6 billion) stimulus plan as central banks and governments acted to jolt the world out of a deepening slowdown. [ID:nN26340386]

Trading houses surged on hopes that a better Chinese economy would boost commodities demand, with Mitsui & Co (8031.T: Quote, Profile, Research, Stock Buzz) climbing 8.3 percent to 846 yen and Itochu Corp (8001.T: Quote, Profile, Research, Stock Buzz) gaining 9 percent to 483 yen. Marubeni Corp (8002.T: Quote, Profile, Research, Stock Buzz) rose 7.7 percent to 334 yen.

Mitsui O.S.K. Lines (9104.T: Quote, Profile, Research, Stock Buzz) and other shipping companies also rose on China hopes, helped by bargain-hunting by investors eager to snap up shares in the beaten-down sector.

Mitsui O.S.K. jumped 6.1 percent to 507 yen, while Nippon Yusen (9101.T: Quote, Profile, Research, Stock Buzz), Japan's largest shipping firm, rose 5.3 percent to 517 yen. Kawasaki Kisen (9107.T: Quote, Profile, Research, Stock Buzz) rose 5.2 percent to 384 yen.

Trade fell off slightly, with 1.97 billion shares changing hands on the Tokyo exchange's first section compared to last week's 2.1 billion.

Advancing shares outnumbered declining ones by 2 to 1. (Reporting by Elaine Lies; Editing by Edwina Gibbs)