* Intervention talk puts Nikkei briefly in positive territory
* But lack of confirmation, China spat weigh - analysts
* Impact of this intervention seen limited -analysts
* Nikkei has support near 9,400 on daily Ichimoku chart
By Elaine Lies
TOKYO, Sept 24 (Reuters) - Tokyo stocks lost 1 percent on Friday, failing to stay in positive territory as momemtum gained from talk of fresh intervention by Japanese authorities to weaken the yen petered out when no confirmation emerged.
Rising diplomatic tensions between Japan and China regarding a feud over disputed islets in the East China Sea were also weighing on the benchmark, they added.
But in a possible a step towards resolving the dispute, Japanese media said before the close of trade that Japan had decided to release the captain of a Chinese fishing boat at the centre of the spat.
"The Nikkei was only briefly helped by the talk of intervention, especially since it's hard to tell if any such move actually took place," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.
"There's a lot of risk factors that have suddenly emerged, such as the situation with China, and this is making it very hard for the Nikkei to rise."
There was no immediate confirmation from authorities that they had intervened but the dollar rose to 85.40 yen from about 84.55 yen in a matter of minutes. It later fell back below 85 yen again.
Market players said the impact for the Nikkei would be more limited than on Sept. 15, when Japanese authorities intervened repeatedly through the Asian, European and U.S. trading day and spending an estimated 2 trillion yen ($23 billion) to drive the dollar up from a 15-year low.
"Given that this would be the second time (for intervention) and not as much of a surprise, I think the impact will be pretty limited at best," said Masayoshi Okamoto, head of dealing at Jujiya Securities.
"Even now, it seems tough for the dollar to hang onto the 85 yen level, and this will make it hard for the Nikkei to rise substantially in turn."
The benchmark Nikkei fell 94.65 points to 9,471.67 after turning positive on the intervention talk. Prior to the dollar spiking, it fell as much as 1.6 percent.
The Nikkei lost 1.6 percent on the week but is still up some 7 percent for the month. It hit a seven-week high just above 9,700 on Tuesday as the yen retreated against the dollar in the wake of yen-selling intervention by Japanese authorities last week.
It is supported around 9,400, which is right around the bottom of its daily Ichimoku cloud.
The broader Topix shed 1 percent to 838.41.
CHINA WORRY
Amid rising Japan-China tensions, Tokyo has also heard that rare earth exports to Japan from China have been blocked, although Japan's trade minister said that China has told Japan that there was no ban.
Glass makers lost ground on the news. Some glass makers use abrasive that contains a rare earth element called cerium, whose supply was already tight after the Chinese government cut rare earth exports for 2010 by 40 percent. China dominates the global supply of rare earths.
Asahi Glass fell 3 percent to 872 yen, and Nippon Sheet Glass fell 1.6 percent to 184 yen. Hoya, which makes glass memory disks for hard disk drives, dropped 1.9 percent to 2,061 yen.
Sony Corp and other exporters slipped, with Sony losing 0.1 percent to 2,585 yen, Honda Motor Co shedding 0.8 percent to 2,931 yen and chip tester maker Advantest falling 1.6 percent to 1,708 yen.
Trade picked up, with 1.9 billion shares changing hands on the Tokyo exchange's first section, the highest since Sept. 15 -- the day Japan intervened.
Declining shares beat advancing ones by more than 4 to 1. (Additional reporting by Masayuki Kitano; Editing by Edwina Gibbs)