(Updates with current levels as of 0230 GMT)

By Brigid Riley

TOKYO, Aug 9 (Reuters) - Japan's Nikkei share average

rebounded on Friday, as a surprise drop in U.S. unemployment

claims assuaged recession fears that had contributed to a

massive sell-off at the start of the week, while a softer yen

also provided some respite.

The Nikkei was up 1.6% at 35,380.23 by the midday

break, after rising as much as 2% earlier in the session. The

broader Topix climbed 1.5% to 2,498.35.

The rebound came after U.S. stocks closed sharply higher

overnight as the U.S. unemployment report suggested that fears

the economy could be heading for a hard landing may have been

overblown and the gradual softening in the labour market remains

intact.

Lending further support to the Japanese stock market, the

yen was trading somewhat softer at 147.275 yen against

the dollar, buoying export-related shares like Sony Group

and Mazda Motor.

Trading volumes were subdued as investors took positions

carefully ahead of a long weekend. Japanese markets will be

closed on Monday for a public holiday.

Trading has been choppy in recent days following a dizzying

double-digit swings that rocked Japan's stock markets earlier

this week.

U.S. recession worries and the unwinding of investments

funded by a soft yen had fuelled the global sell-off.

While the market has calmed since then, analysts say

volatility will likely continue into next week as market players

look for data to support a soft landing scenario for the world's

largest economy.

"The U.S. economy is slowing down, but it's difficult to

judge at the moment whether it will cool rapidly or gradually,"

making the market more reactive to economic indicators, said

Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS

Asset Management.

The Bank of Japan's decision last week to hike interest

rates had also raised an alarm over how fast the central bank

would tighten monetary policy, prompting its deputy governor to

do some damage control on Wednesday.

The Nikkei has managed to claw back most of its losses after

Monday's brutal sell-off that saw the index shed 12.4%, putting

it on track for a comparatively tame decline for the week.

Among individual stocks, Recruit Holdings ( RCRRF ) and

Itochu Corp ( ITOCF ) gained nearly 7% each and were among the

largest percentage gainers in the index.

Chip-making equipment giant Tokyo Electron ( TOELF ) jumped

more than 10% before giving up most of its gains as investors

digested its earnings results announced after market hours on

Thursday. The stock was last up 1.7%.

(Reporting by Brigid Riley; Editing by Sherry Jacob-Phillips

and Subhranshu Sahu)