* Nikkei on track for best quarter since July-Sept 1995
* Bridgestone jumps after raising earnings outlook
* Suzuki Motor up on possible VW cooperation deal
* Nippon Oil up on report of likely Iraq oil deal
By Masayuki Kitano
TOKYO, June 26 (Reuters) - Japan's Nikkei stock average rose 0.8 percent on Friday, with tyremaker Bridgestone surging after it lifted its earnings outlook and Suzuki Motor Corp jumping after a source said Volkswagen was interested in a tie-up.
Nippon Oil Corp climbed over 3 percent after a newspaper reported that it and other Japanese companies are in the final stage of talks with Iraq to win the development contract for Iraq's huge Nassiriya oilfield.
The benchmark stock average was also helped after better- than-expected earnings from U.S. retailer Bed Bath & Beyond helped revive a sense that the U.S. recession may be starting to ease.
The Nikkei, which hit 8-month highs above 10,000 earlier this month, is on track for its best quarter since the July-September quarter of 1995, having climbed 22 percent since the end of March.
The Nikkei may be setting sights on a rise to levels above 10,000 again, said Toshihiko Matsuno, assistant general manager at SMBC Friend Securities' investment research department.
"Even if such a recovery does occur, however, there will need to be some support from fundamentals to chase the market higher," Matsuno said.
Next week the focus will be on economic indicators, including the Bank of Japan's "tankan" business sentiment survey, he said.
The Nikkei rose 81.31 points to 9,877.39, having risen 0.9 percent for the week.
The broader Topix rose 0.8 percent to 926.80.
Suzuki Motor rose 5.5 percent 2,195 yen after a source familiar with the matter said Volkswagen is exploring a potential cooperation deal with Suzuki as a way to boost its expertise in the area of ultra-small cars.
Bridgestone jumped 8.5 percent to 1,520 yen and Nippon Oil rose 3.1 percent to 570 yen. (Additional reporting by Elaine Lies; Editing by Edwina Gibbs)