Nikkei at 4-wk high on Europe hopes, shippers shine

* Nikkei up 1.7 pct, tops 75-day average

* Investors slowly share optimism on euro zone

* Shippers jump nearly 10 pct on buyback

* Olympus falls after 3rd-party panel report

By Hideyuki Sano

TOKYO, Dec 7 (Reuters) - The Nikkei average hit a
four-week high on Wednesday as investors warmed to the view that
European policy-makers will come up with convincing steps this
week to help resolve the region's debt crisis.

Cyclical shares such as shippers and steelmakers were also
helped in making huge gains after recent credit easing by big
emerging economies such as China and Brazil eased worries about
a sharp slowdown in the global economy.

"Optimism is growing on the euro zone. Policy-makers have
been making progress recently and the market thinks the European
Central Bank and euro-zone countries will work together on the
crisis," said Hideyuki Ishiguro, assistant manager of investment
strategy at Okasan Securities.

The benchmark Nikkei added 1.7 percent to 8,722.17,
its highest close in four weeks and ending above its 75-day
moving average for the first time since late October. Last time
it topped the average it managed to maintain that position for
less than two days.

The broader Topix index gained 1.6 percent to
749.63.

Many market players expect the European Central Bank to cut
rates on Thursday and European leaders to move towards tighter
integration of the euro zone's fiscal policy at their summit
meeting on Friday.

Sharp falls in euro-zone government bond yields this week,
which came despite a warning from Standard and Poor's of a mass
downgrade of credit ratings in the currency bloc, is also
fuelling optimism over Europe.

"Banks can now buy bonds again after Merkel's Germany backed
down on the European Stability Mechanism," said Eiji Kinouchi,
chief technical strategist at Daiwa Securities, referring to the
fact that German Chancellor Angela Merkel gave ground on a
stance that investors would suffer a loss in any future bailout
scheme when she met French President Nicholas Sarkozy on Monday.

Kinouchi also said banks' selling of euro-zone government
bonds, which lie at the heart of the debt problem, should
subside after they submit plans to enhance their capital at the
year-end.

Volume picked up, with 1.81 billion shares changing hands on
the main board, about 16 percent above its average for the past
20 days. Advancers outnumbered decliners by 1,366 to 204.

OLYMPUS DROPS AFTER PANEL REPORT

Shares of Olympus Corp fell 5.2 percent to 1,128
yen as short-term buyers exited positions after an independent
panel investigating the accounting scandal at the firm urged it
to pursue legal action against former executives responsible for
the loss-hiding schemes and replace the board.

"They have been rallying on hopes on the panel report. So it
was a good time to take money off the table," said a fund
manager at a Japanese asset management firm.

Investors are now focusing on whether Olympus can meet a
Dec. 14 deadline to report its second-quarter results and reveal
the size of the restatement required to iron out its accounts.

Shipping firm Mitsui OSK Lines surged 11.2 percent
to 288 yen after announcing it would form a joint supertanker
service with Danish and Singapore tankers to better compete in a
difficult freight market.

That also boosted rival Nippon Yusen KK by 7.9
percent to 192 yen and Kawasaki Kisen by 7.3 percent to
147 yen.

The Tokyo Stock Exchange's shippers subindex rose
9.3 percent, though that came only after shares of all three
shipping firms had tumbled on Monday following reports that the
companies planned to scrap 10 percent of their supertankers.

Steelmakers rose 3.6 percent as investors bought
back the battered sector after China eased its monetary policy
last week.

(Additional reporting by Mari Saito and Lisa Twaronite; Editing
by Chris Gallagher and Michael Watson)