(Reuters) - Japan's Nikkei share average rose modestly on Friday after signs of strength in the U.S. economy but remained on track for weekly losses, as investors continued to worry about the impact of Europe's debt crisis.
Olympus (7733.T) continued to slip as the company faced its creditors after restating accounts following a 13-year fraud that dented its balance sheet, prompting speculation it will need to raise capital to repair its finances.
Online gaming firm Nexon Co (3659.T) was the biggest loser on the main board, down more than 10 percent as it continued to drop from its disappointing trading debut on Wednesday.
The benchmark Nikkei finance/markets/index?symbol=jp%21n225>.N225 was down 0.3 percent at 8,405.73 in afternoon trade, but was on track for a 1.5 percent loss on the week.
The broader Topix index .TOPX slipped 0.2 percent to 723.49, capped by selling by European long-term investors.
The benchmark remained below its 25-day average, which is now a resistance point around 8,484. One key to its near-term direction is whether it can retake that level next week, technical analysts said.
If the Nikkei can top its 25-day moving average again, even as trading becomes thinner ahead of the Christmas holiday, that would be a hopeful sign, said Yutaka Miura, senior technical analyst at Mizuho Securities.
If there is no bad news about Europe, the Nikkei could rise as traders cover short positions ahead of the holiday, he added.
Kakuya Kojoh, manager of securities at Nissan Century Securities, said a fall near the November 27 low of 8,135 could not be ruled out.
While some had hoped for year-end buying -- the Nikkei has gained in December in seven of the last eight years -- it looked questionable with the Nikkei now down 0.3 percent on the month.
A fall in U.S. weekly jobless claims to a 3- year low and improved U.S. regional factory data prompted some players to buy back cyclical shares, including battered shipping firms. The shipping subindex .ISHIP.T was the best performer, gaining 4 percent.
The euro was just a step away from hitting a decade low against the yen, putting pressure on shares of exporters with big exposure to Europe, such as precision machine makers.
The Tokyo Stock Exchange's precision machine makers subindex .IPRCS.T fell 0.5 percent.
Olympus fell 3.8 percent as short-term buyers who had bought it on hopes that the company would submit restated earnings to stay listed closed their positions.
Fujifilm Holdings Corp (4901.T) lost 1.2 percent after it said on Thursday it would buy U.S.-based medical equipment maker SonoSite Inc (SONO.O) for about $753 million.
But Gree (3632.T) climbed 0.7 percent and was the heaviest traded issue by turnover, and rival DeNA (2432.T) rose 4.5 percent, after Nomura Securities assigned buy ratings to the social gaming companies after suspending ratings due to a change of analyst.
Nomura, which said it is bullish on net-related firms due to factors including the increased use of smartphones, chose Cyber Agent (4751.T) as its top pick among Internet shares. The firm advanced 4.2 percent.