* Nikkei up 0.8 pct, moving further away from 16-mth lows
* Resistance looms; next support seen at 8,800, 8,697
* Trend Micro jumps on report of takeover proposals
By Aiko Hayashi
TOKYO, Sept 9 (Reuters) - Japan's Nikkei average rose 0.8 percent on Thursday, lifted by short-covering after successful bond auctions in Portugal and Poland helped ease worries about Europe's debt problems.
The benchmark Nikkei moved further away from a 16-month low below 9,000 hit last week, with support seen solid around 8,800, a level it has tested and held a few times in recent weeks.
But the strength of the yen, which stayed within sight of a 15-year high versus the dollar touched on Wednesday, weighed on investor confidence. In addition resistance looms on technical charts, casting doubt over further gains in the Nikkei.
Shares in Trend Micro shot up more than 16 percent after a Taiwanese newspaper said the anti-virus computer software developer had received takeover proposals, citing its CEO.
"Worries about Europe were soothed somewhat following a bond auction in Portugal, and that prompted short-covering in the market, which was hit hard by the advance in the yen versus the dollar and the euro yesterday," said Tsuyoshi Segawa, an equity strategist at Mizuho Securities.
"But market players were reminded that Europe's sovereign concerns are continuing and that it's not something that will improve right away. Even though further falls are likely to be limited for the Nikkei, more gains are also likely to be capped for a while."
The benchmark Nikkei rose 70.92 points to 9,095.52 by midday. It fell 2.2 percent on Wednesday to 9,024.60 after falling as low as 8,997.63, back towards a 16-month low of 8,796.45 hit on Sept. 1.
The broader Topix added 0.6 percent to 825.88.
In early Asian trade the dollar changed hands at 83.72 yen after falling as low as 83.34 yen on Wednesday, a new 15-year low, with traders testing Japanese authorities' pain threshold for currency strength.
Market sentiment improved after a successful auction of Portuguese debt eased concerns about the credit-worthiness of weaker European economies.
Portugal raised 1.04 billion euros ($1.32 billion), helping calm fears about government funding in Europe. Poland's sale of five-year bonds also saw solid demand.
U.S. stocks rose as banking shares gained ground, while a key European index, the FTSEurofirst 300, rose 1 percent to a four-month closing high.
The Nikkei meanwhile stayed below 9,170, around its 25-day moving average, which had served as strong resistance from August until it was pierced briefly this week. The 25-day moving average is considered a proxy for a one-month moving average and is closely watched in Japan.
The bottom of the Nikkei's Ichimoku cloud lies around 9,530, forming resistance for the index. Ichimoku charts are popular with Japanese traders.
Market analysts see support around 8,800, and after that the next target is 8,697, a 61.8 percent retracement of the Nikkei's rally from its March 2009 low to its April 2010 high.
EXPORTERS UP, TREND MICRO SOARS
Shares of Trend Micro surged 16.3 percent to 2,717 yen. A spokeswoman for the company said it was checking into the report and had no immediate comment.
"There is a possibility that it (Trend Micro) will be taken over," said Deutsche Securities analyst Satoru Kikuchi. "I don't think business is going all that well, and they are probably not as confident as they were 10 years ago. So if they get a good offer they may sell."
Shares of exporters regained ground after leading a drop in the market the previous day.
Canon Inc advanced 1.3 percent to 3,555 yen and Kyocera Corp rose 0.7 percent to 7,480 yen. Automakers also climbed, with Toyota Motor Corp up 1.8 percent at 2,926 yen.
Shares of Sumitomo Metal Mining, a smelter of nonferrous metals, gained 3.2 percent to 1,194 yen after Credit Suisse raised the target price for the stock and revised its rating to "outperform".
Credit Suisse cited good long-term growth prospects for the smelter amid an upturn in nonferrous metal markets. ($1=.7859 Euro) (Additional reporting by Isabel Reynolds; Editing by Michael Watson)