* Nikkei trims early losses of as much as 1.6 percent
* Impact of intervention talk likely limited at best -analyst
TOKYO, Sept 24 (Reuters) - Japan's Nikkei average trimmed losses on Friday after the dollar jumped sharply against the yen on talk of intervention by Japanese authorities for a second time this month, but rising tensions between China and Japan weighed on the market.
Market players said the impact of any such move 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 was down 0.5 percent at 9,514.456. It earlier fell as much as 1.6 percent but later nudged into positive territory after the dollar spiked higher against the yen.
The broader Topix was 0.5 percent lower at 841.98.
The two countries are feuding over disputed islets in the East China Sea, while China has detained four Japan nationals on suspicion of entering a Chinese military zone.
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.
The dollar was up 0.9 percent against the yen at 85.13 yen after earlier rising as far as 85.40.
The Nikkei 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 still up about 8 percent for the month.