TOKYO, July 26 (Reuters) - Japan's Nikkei share average

traded higher on Friday, snapping a seven-day losing streak, as

investors scooped up stocks that appeared undervalued after the

long decline.

The Nikkei inched up 0.5% by the midday break,

recovering from a three-month low reached in the previous

session. The index is set to fall 5% for the week.

The broader Topix rose 0.58% to 2,725.55 and is

poised to fall 4.72% for the week.

"The market fell too much so that investors bought back

stocks, but still heavyweight chip-related stocks were weak,

which capped the gains," said Shuutarou Yasuda, a market analyst

at Tokai Tokyo Intelligence Laboratory.

"But the bright side was that the market bought companies

that reported a positive outlook. With the earnings season

continuing after next week, a strong corporate outlook is

expected to support the Nikkei."

Hino Motors ( HINOF ) surged 11.76% to become the top

percentage gainer on the Nikkei after the truck maker narrowed

its quarterly net loss.

Canon jumped 8.29% after the camera maker reported

on Thursday its annual operating profit rose to 465 billion yen

($3.02 billion), up 24% from a year earlier.

Fujitsu ( FJTSF ) jumped 10.51% after the computer maker said

on Thursday its quarterly net profit quadrupled to 16.8 billion

yen.

However, Nissan Motor ( NSANF ) extended losses, falling

2.8%, after falling 7% on Thursday as the automaker slashed its

annual outlook.

Renesas Electronics ( RNECF ) fell 5.55% to become the

biggest percentage loser on the Nikkei. The chip-maker tanked

13.6% on Thursday after reporting a 29% decline in net profit

for six months to June.

Heavyweight chip-related stocks fell, with Tokyo Electron ( TOELF )

and Advantest ( ADTTF ) falling 2.29% and 1.65%,

respectively.

Of the 225 Nikkei components, 168 stocks rose and 57 fell.

($1 = 153.9500 yen)