* Says Nikkei could test this year's high of around 11,400
* Says global economy will avoid double-dip recession
* Invesco holds $32 billion in assets in Japan
By Chikafumi Hodo and Michiko Iwasaki
TOKYO, July 27 (Reuters) - Japanese equities could recover as much as 17 percent from current levels by the end of the year as the global economy continues to pick up, the chief investment officer of Invesco Asset Management Japan said on Tuesday.
The Japanese unit of Atlanta-based fund manager Invesco is optimistic about the global economic outlook as markets have survived bank stress tests in Europe and a series of U.S. financial regulatory measures, Kunihiko Sugio, who is also a managing director, told Reuters in an interview.
"I wouldn't be surprised if Japanese share prices rose back to the highs seen earlier this year provided the global economy picks up at a pace we expect," he said.
Japan's benchmark Nikkei stock average closed at 9,496.85 on Tuesday, down about 17 percent from an 18-month intraday high of 11,408.17 reached on April 5.
The world economy should avoid a double-dip recession as global financial regulators coordinate much more closely, Sugio said.
In addition, China is not expected to take stronger tightening measures to further cool its economy, he continued.
Invesco thinks shares of Japanese firms that can draw demand from China are attractive in the short term, he said.
The asset company is also interested in companies that are developing products or technologies to improve energy efficiency in the long run.
Investors are looking at firms involved in producing equipment for nuclear power plants, hybrid cars and inverter air conditioners, he added.
"There are many companies that have been focusing on developing environmentally friendly products and technologies for a long time. Such firms are starting to draw strong attention."
Invesco is enthusiastic about Japanese stocks as it expands its equity offerings at a time when many other asset managers are less keen on shares from the world's second largest economy.
"Invesco has combined our teams here, which shows our strong commitment to the country and Japanese markets," Sugio said.
Invesco completed the acquisition of Morgan Stanley's retail asset management business last month, lifting its assets under management to 2.8 trillion yen ($32.20 billion).
Invesco as a whole holds $580.8 billion in assets, making it one of the leading independent global investment management companies.
Assets under management in Invesco Japan's active equity funds totalled around $7 billion as of July 5.
The tie-up with Morgan Stanley made it possible to introduce two more active equity funds -- Japanese Equity Advantage Composite and Japanese Equity Value Composite -- into Invesco's line-up. ($1=86.96 yen) (Reporting by Chikafumi Hodo and Michiko Iwasaki; Editing by Joseph Radford)