* Nikkei turns positive as automakers gain on Renesas news
* Gains may be limited amid uncertainty over earnings-fund manager
* Trading thin before earnings, holidays overseas
By Ayai Tomisawa
TOKYO, April 22 (Reuters) - Japan's Nikkei stock average erased earlier losses and edged higher on Friday after news that Renesas Electronics would resume operations at a key auto-chip factory triggered buying of major automakers.
Renesas , a major supplier of chips to the auto industry, said on Friday it would resume operation of a factory in Ibaraki prefecture on June 15, ahead of the previously scheduled target of July.
"This news was a positive surprise. Investors have been sensitive to supply chain-related news and it surely triggered buying in automakers," said Makoto Kikuchi, chief executive officer of Myojo Asset Management.
Kikuchi added that gains may limited because "only short-term investors seem to be buying as long-term investors would want to wait until actual earnings are out from companies."
The benchmark Nikkei average was up 0.2 percent at 9,707.29 in early afternoon trade, while the broader Topix added 0.1 percent to 842.45. Both were in negative territory during morning trade.
Renesas gained 1.8 percent to 721 yen, while Toyota Motor rose 1.7 percent to 3,250, Honda Motor added 1.0 percent to 3,105 and Nissan Motor advanced 2.0 percent to 761 yen.
Analysts said there were fewer market participants on Friday with the United States and many other overseas markets closed for holidays, while investors remained cautious ahead of earnings reports next week that are expected to show the impact of last month's devastating earthquake on profits.
Shares of Canon Inc , which reports on Tuesday, fell 2.0 percent to 3,490 yen. The Nikkei business daily said the camera and office equipment maker would likely report an 8 percent fall in first-quarter operating profit and cut its full-year forecast. [ID:nL3E7FL4FP]
"Investors remain cautious ahead of major Japanese corporate earnings next week. Therefore they may take profits from recent gains but they probably won't take large positions today," said Kenichi Hirano, a strategist at Tachibana Securities.
Yaskawa Electric surged 6.7 percent to 921 yen after Credit Suisse raised its rating on the stock to "outperform" from "neutral", citing easing concerns about its ability to secure parts supplies. (Editing by Nathan Layne)