(Rewrites first paragraph; updates with closing prices)

TOKYO, May 16 (Reuters) - Japanese shares recouped early

losses to end flat on Friday, as stronger-than-expected domestic

earnings prompted investors to overlook a stronger yen and pour

more money into stocks.

The Nikkei ended flat at 37,753.72, after

falling as much as 0.73% earlier in the session on a stronger

yen. The index rose 0.67% for the week in its fifth straight

week of gains.

The broader Topix also reversed course, inching

up 0.05% at 2,740.45 and inched up 0.2% for the week.

"The market bought back stocks on optimism of corporate

outlook after a series of stronger-than-expected earnings," said

Shoichi Arisawa, general manager at the investment research

department at IwaiCosmo Securities.

"And more-than-expected announcements for share buybacks

is very positive to the market."

The Nikkei had reclaimed the psychologically important

level of 38,000 earlier this week on hopes that a Japan trade

deal could be on the cards after a tariff truce between the U.S.

and China.

But since then, the market has drifted lower as a lack

of clarity on trade negotiations crimped gains.

Among individual stocks, Mitsubishi UFJ Financial Group ( MUFG )

ended 0.88% higher after announcing a share buyback

worth about 250 billion yen ($1.72 billion).

However, its peers Sumitomo Mitsui Financial Group ( SMFG )

and Mizuho Financial Group ( MFG ) fell 1.59% and 1.97%,

respectively, even as the three banking groups posted record

annual net profits in the last financial year.

Seiichi Suzuki, chief equity market analyst at Tokai

Tokyo Intelligence Laboratory, said Japanese firms are set to

buy back as much as 8.5 trillion yen worth of shares in April

and May alone, helping the index's further rises.

Phone company KDDI ( KDDIF ) rose 1.27% after it said it

would buy back up to 400 billion yen of shares.

Chip-related Tokyo Electron ( TOELF ) and Advantest ( ADTTF )

fell 2.76% and 1.89%, respectively, to weigh on the Nikkei the

most.

($1 = 145.1300 yen)

(Reporting by Junko Fujita; Editing by Eileen Soreng and Varun

H K)