* Nikkei edges up towards resistance near 10,400
* Showa Shell Sekiyu climbs on solar cell plant news
* Firms seen as strong in environment-friendly tech rise
* Worries about yen's recent rise vs dollar temper gains
By Masayuki Kitano
TOKYO, Sept 8 (Reuters) - Japan's Nikkei stock average rose 0.7 percent on Tuesday, with Showa Shell Sekiyu rising on plans to build a new solar cell plant, but gains were limited as the yen's firmness weighed on some exporters.
Shares of firms seen as strong in environment-friendly technology such as car battery maker GS Yuasa climbed after Japan's prime minister-elect Yukio Hatoyama said on Monday he would forge ahead with a 25 percent cut in emissions by 2020.
Banking shares including Mizuho Financial Group retreated after top central bankers and regulators agreed on a proposal for new banking rules on Sunday that would require banks to raise the quality of their top-tier capital buffers.
A firmer yen held back exporters such as Toyota Motor Corp and helped temper gains in Tokyo shares, market players said.
"A major theme in the near term is corporate earnings, which will be announced starting in October," said Masayuki Doshida, market analyst for Matsui Securities.
Investors have been buying Tokyo shares on expectations for upward revisions to earnings forecasts, but some doubts may be starting to emerge, Doshida said.
"The yen's recent rise and worries that upward revisions could be hard to come by are weighing on the market," he said.
The benchmark Nikkei rose 72.29 points to 10,393.23, edging back up towards its 25-day moving average around 10,400 -- key resistance that analysts say it must break to establish a rebound.
The broader Topix rose 0.2 percent to 946.40.
The dollar dipped 0.5 percent to 92.61 yen, edging back towards a seven-week low near 91.95 yen hit last week.
Tokyo Dome jumped 8.8 percent to 297 yen with the end of speculation that it would be removed from the Nikkei average, after the publisher of the Nikkei said it would not carry out a reshuffle this year.
Turnover was roughly 1.2 trillion yen on the Tokyo exchange's first section, up slightly from Monday's 1.05 trillion yen, which was the lowest since July 17. Turnover was still light, stuck below the 20-day average of 1.3 trillion yen.
TRADE TO PICK UP
Trade on Monday had been extremely thin, but market players said this was due more to seasonal factors than to investor worry ahead of the formation of a new government by Japan's novice Democratic Party.
Orders placed through foreign securities houses ahead of the start of trade have shown foreign investors, long a key driver and setter of direction for the Nikkei, to be net sellers virtually every day since the election on Aug. 30.
"While it's true there were a lot of expectations for the new government on the part of foreign investors, the fact that there has been a change is still positive in their minds," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.
"The drop-off in market activity is mainly due to seasonal factors, such as the U.S. Labor Day holiday, and not to worries about the new government. Trade should start picking up soon."
JVC Kenwood Holdings Inc surged 30.6 percent to 64 yen after the Nikkei business daily said it was likely to post its first operating profit in three quarters.
Showa Shell Sekiyu gained 2.3 percent to 995 yen and GS Yuasa leapt 9.2 percent to 871 yen.
Advantest Corp rose 1.5 percent to 2,360 yen after the Nikkei business daily quoted Advantest President Haruo Matsuno as saying that orders for Advantest's chip testers and other equipment in July-September were better than expected and are likely to beat the 11.6 billion yen ($125 million) logged in the previous quarter.
Japan Tobacco rose 3.4 percent to 291,700 yen after Goldman Sachs analyst Katsunori Tanaka upgraded the company's shares to "buy" from "neutral" and added them to Goldman's "Japan Conviction List".
Trading volume was basically on par with last week's daily average, with 1.86 billion shares changing hands on the Tokyo exchange's first section. Advancing shares outnumbered declining shares by almost 2 to 1. ($1=93.01 Yen) (Additional reporting by Elaine Lies; Editing by Chris Gallagher)