* Trading firms gain on higher commodity prices
* Banks gain helped by bullish views on US financial sector
TOKYO, Oct 7 (Reuters) - Japan's Nikkei average rose 1.2 percent on Wednesday, helped by gains in bank shares such as Mizuho Financial Group after optimism about the global economy and U.S. corporate earnings boosted Wall Street.
Trading houses including Mitsubishi Corp gained on higher commodity prices, with gold hitting record highs on Tuesday as the sinking dollar drove inflation-wary investors to buy the precious metal and almost every other commodity.
But Aeon Co lost 1 percent after Japan's No. 2 retailer reported a 39.5 percent fall in first-half operating profit, hurt by prolonged weak consumer spending, though it reiterated its full-year outlook above the market forecast.
"An increasing number of brokers are turning bullish on U.S. financial stocks and that's prompting investors to adjust positions in Japanese financials that had lagged behind," said Tsuyoshi Segawa, an equity strategist at Mizuho Securities.
Goldman Sachs upgraded this week the U.S. large-cap bank sector, saying share prices for companies in the industry didn't reflect their earnings power. The news has helped boost both U.S and Japanese financial shares.
The benchmark Nikkei rose 116.36 points to 9,808.16, after inching up 0.2 percent the previous day. Last week, the index shed 5.2 percent, its worst weekly loss in about three months.
The broader Topix added 1.4 percent to 884.02.
The S&P 500 Index gained 1.4 percent on Tuesday after news that Australia became the first G20 country to raise interest rates since the onset of the financial crisis, saying that the worst danger for the economy had passed.
That underscored for many that the global economy was on the mend and the economic optimism spurred gains in energy and other commodities, lifting shares of oil and resource companies.
Japan's top bank, Mitsubishi UFJ Financial Group, jumped 5.1 percent to 499 yen and Mizuho added 2.7 percent to 189 yen.
Shares of trading houses climbed, with Mitsubishi Corp, Japan's largest trading house, gaining 5.1 percent to 1,850 yen and fellow trader Mitsui & Co climbing 4.5 percent to 1,166 yen.
Aeon shares fell to 822 yen. (Reporting by Aiko Hayashi; Editing by Chris Gallagher)