By Lisa Twaronite
TOKYO, Sept 7 (Reuters) - The Nikkei average climbed 2 percent on Wednesday on short-covering after three days of losses, with market participants calling the move a short-term rebound amid fears about the sovereign debt situation in Europe and a U.S. economic slowdown.
A regional rally helped Tokyo extend gains in the afternoon and analysts said that after a 5.2 percent drop in Tokyo stocks in the past three days, valuations show stocks listed on the main board trading at an attractive average price-to-book ratio of 0.92.
But wariness persisted ahead of the U.S. Federal Reserve's Beige Book of regional economic conditions to be released later Wednesday, which could provide fresh clues on the strength of the U.S. economy.
"We can't call this an uptrend until we have confirmation from other regions that there's reason to keep buying shares other than covering short positions," said Yutaka Miura, senior technical analyst at Mizuho Securities.
The benchmark Nikkei rose 2.0 percent to 8,762.43. The broader Topix index added 1.8 percent to 754.26.
Despite Wednesday's performance, the Nikkei's March 15 intraday low of 8,227 is still in sight depending on the performance of global markets, said Norihiro Fujito, a senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
"It's a short-term rebound. I'm rather pessimistic," Fujito said of Wednesday's gains.
Volume was thin with about 1.48 million shares changing hands on the Tokyo stock exchange's main board, poised to fall short of last week's daily average of 1.8 billion.
Over the past three losing days, thee Bank of Japan bought exchange-trade funds worth 66.9 billion yen ($868 million) which limited losses and lifted market sentiment. Japanese pension funds also bought shares, market participants said. (Additional reporting by Ayai Tomisawa; Editing by Edwina Gibbs)