By Sophie Knight
TOKYO (Reuters) - Japanese shares edged higher on Wednesday, with Renesas Electronics Corp surging 35 percent after sources said U.S. private equity fund KKR & Co plans to invest around $1.3 billion in the struggling chipmaker.
Overall trading remained subdued, however, with volume on the Topix at just 85.9 percent of its 90-day average, as investors were unwilling to build positions ahead of a speech by U.S. Federal Reserve Ben Bernanke on Friday, in which he is expected to give clues on the possibility of further stimulus measures.
"It's risky to buy right now before the Bernanke speech, and the upside is pretty heavy," said Fumiyuki Nakanishi, general manager of investment and research at SMBC Friend Securities.
The Nikkei average rose 0.4 percent to 9,069.81, breaking above its 14-day moving average at 9,056.00, while the broader Topix put on 0.5 percent to 750.03.
Renesas, the world's fifth-largest chipmaker, jumped to a seven-week high on the news of KKR's proposed investment. The Japanese firm is implementing a restructuring plan that would lay off 12 percent of its workforce and sell or consolidate half of its domestic plants.
Struggling TV maker Sharp Corp also surged, climbing 7 percent a fter it said it would offer severance packages to as many as 2,000 workers in Japan.
Short-sellers have been covering their bearish bets on Sharp lately as the company looks likely to survive after Taiwan's Hon Hai Precision Industry confirmed it will take a 9.9 percent stake in the Japanese firm.
"For a while back there it looked like it was all over for Sharp, but now things are looking up; Hon Hai has confirmed its purchase and it's making drastic restructuring plans," said Yoshihiko Tabei, chief analyst at Kazaka Securities.
"Sharp should also get a boost when the iPhone 5 goes on sale soon as it's a major supplier to Apple."
According to data provider Markit, 87.63 percent of Sharp shares available to be borrowed was on loan as of August 27, down from 92.21 percent on August 22.
Sharp's shares have risen 27.7 percent since August 22, although it is still down 66 percent this year.
Daikin Industries Ltd the world's second-largest air-conditioner maker, dropped 3.5 percent after it said it would buy U.S. rival Goodman Global Inc for about $3.8 billion.
Buoyed by expectations of a quick fix from the European Central Bank to bring down Spain and Italy's high borrowing costs, and of more Fed stimulus, investors have pushed the Nikkei up 8.4 percent since it hit a seven-week low on July 25. The index is up 7.3 percent so far this year.
Japanese equities' 12-month forward price-to-book ratio has now recovered to 0.85, a level not seen since mid-July, according to Thomson Reuters Datastream.
Nakanishi at SMBC Friend noted that the Topix's up-down ratio, which expresses the ratio of advancers to decliners over the last 25 sessions, is now at 114, not far from 120, a level seen as a sign that the market is overbought.
Drinks maker Ito En Ltd <2593.T> put on 3 percent to hit its highest level in nearly three years after it announced a share buyback on Tuesday of up to 0.8 percent of all issued stock. Ito En also said it would open offices in Vietnam and Myanmar to extend its influence in emerging markets.
(Additional reporting by Dominic Lau; Editing by Edwina Gibbs)