* Key moving averages around 10,250 support Nikkei-analyst
* Kawasaki Heavy jumps on report of China rail project
TOKYO, Oct 26 (Reuters) - The Nikkei average rose 0.5 percent on Monday, led higher by exporters such as Honda Motor Co on a weaker yen, while Kawasaki Heavy jumped on a report of a high-speed rail project in China.
Banking shares including Japan's top lender Mitsubishi UFJ Financial Group rose on short-covering, market players said, while Japan Airlines gained after a report that a state-backed body will oversee its turnaround.
"The market is optimistic about Japanese earnings as the reporting season heads into full swing," said Kenichi Hirano, operating officer at Tachibana Securities.
"The Nikkei's important technicals --its 75-day and 25-day moving averages-- stand around 10,250 and that is also forming a very strong support line."
The benchmark Nikkei added 50.79 points to 10,333.78, after starting the day slightly lower, tracking a fall on Wall Street.
The broader Topix gained 0.5 percent to 906.76.
The dollar was trading around 92 yen in early Asia trade. Many Japanese exporters have set their currency rate assumptions at 90-95 yen for the year to March.
The Nikkei gained 0.2 percent last week, with investors reluctant to actively take positions ahead of Japanese corporate earnings and a raft of economic indicators in Japan and the United States this week.
On Thursday, Japan will announce its industrial output data for September and the U.S. government is set to report its first estimate on third-quarter gross domestic product.
Honda advanced 2.5 percent to 2,875 yen, while Sony Corp climbed 3 percent to 2,750 yen. Advantest Corp added 1.5 percent to 2,405 yen.
Banking stocks recouped some ground, with Mitsubishi UFJ gaining 1.5 percent to 467 yen. Mizuho Financial Group rose 1.2 percent to 175 yen.
JAL shares gained 1.8 percent to 116 yen, after opening lower.
The Nikkei business daily said the Japanese government plans to put a state-backed turnaround body in charge of the overhaul of the struggling airline, underlining the government's deeper involvement in the process. (Reporting by Aiko Hayashi; Editing by Joseph Radford)