* Nikkei closes morning up 0.2 pct, Topix falls 0.1 pct
* Stocks supported by talk of intervention to check yen strength
* Unilateral intervention effect may be short-lived-fund manager
By Ayai Tomisawa
TOKYO, Aug 22 (Reuters) - The Nikkei stock average inched higher on Monday after Japanese authorities threatened to intervene to stem further rises in the yen and protect the profits of key exporters such as Canon Inc .
Investors were wary of buying actively, however, and the Nikkei spent the morning session bobbing in and out of negative territory, reflecting persistent worries over the health of the U.S. economy and of European banks.
"Investors are scared to sell significantly as they expect the government to take action. Even if it intervenes in the currency market the effect may be short-lived," said Mitsushige Akino, a fund manager at Ichiyoshi Investment Management.
"If the government unilaterally intervenes in the currency market the Nikkei may regain some 100 points, but Japan's efforts alone will not change fundamentals."
The benchmark Nikkei closed the morning session up 0.2 percent at 8,735.57. The broader Topix index was down 0.1 percent at 750.78.
Market players are increasingly on edge about the possibility that Japan may intervene in the wake of the dollar's slide to a record low around 75.95 yen late last week.
After the close of the morning stock session, the dollar briefly surged above 77 yen amid talk of bids by a U.S. bank. But it quickly paired those gains and was currently trading around 76.8 yen .
Japanese Finance Minister Yoshihiko Noda said Monday that authorities would take decisive action against speculative moves in the currency markets, signalling Tokyo's readiness to intervene to check yen strength.
Shares of camera and office equipment maker Canon rose 1.3 percent to 3,510 yen while rival Nikon Inc gained 1.7 percent to 1,637 yen. Other exporters fell, however, with Toyota Motor Corp dropping 1.6 percent to 2,725 yen.
U.S. RECESSION FEARS
On Friday, U.S. stocks fell after Hewlett-Packard's weaker outlook and corporate shakeup added to uncertainty for investors. It was the latest discouraging event in a month full of bad surprises ranging from a U.S. credit rating downgrade to a sharp slowdown in world growth.
Analysts said investors are awaiting a speech by Federal Reserve Chairman Ben Bernanke on Aug. 26 in Jackson Hole, Wyoming, for hints on how policymakers plan to handle the turmoil in financial markets.
"Investors want to see if U.S. markets will have a technical rebound tonight as they fell sharply at the end of last week," said Yutaka Miura, a senior technical analyst at Mizuho Securities. "It they slide again, repercussions in the Japanese market will likely be serious."
He said the market is closely watching the Nikkei to see if it sets a new five-month low beyond 8,656 hit on Aug. 9.
Shares of Inaba Seisakusho gained 6.3 percent to 863 yen after the producer of steel storage units raised its operating profit estimate on Friday for the year ended July 31 to 470 million yen from 60 million yen, as cost-cutting measures offset the impact of higher steel prices.
Shares of Resort Trust were up 3.4 percent at 1,254 yen after Daiwa Capital Markets raised its rating on the membership hotel operator to "outperform" from "hold", citing better-than- expected business at its hotel restaurants, which rose to record high rates in July.
Volume was thin with 803 million shares changing hands on the Tokyo Stock Exchange's main board. Daily volume is likely to be slightly lower than last week's average of 1.7 billion shares. ($1 = 76.245 Japanese Yen) (Additional reporting by Lisa Twaronite; Editing by Nathan Layne)