Nikkei climbs 1.3 pct, autos lead gains on oil, yen

*Nikkei rises as oil's fall to six-week low buoys carmakers

*Banks rise on U.S. financial rescue hopes, but pare gains

*Some plants halted after earthquake, but impact limited (Adds stocks, details)

By Elaine Lies

TOKYO, July 24 (Reuters) - Japan's Nikkei stock average climbed 1.3 percent on Thursday, in sight of its highest close since June, as Toyota Motor Co (7203.T) and other carmakers led gains among exporters after oil prices fell to a six-week low and the yen weakened. Advantest Corp (6857.T) and other chip equipment firms sold off earlier this week bounced back, while banks rose on relief for troubled home financers Fannie Mae (FNM.N) and Freddie Mac (FRE.N) after U.S. President George W. Bush dropped a threat to veto a housing rescue bill.

A strong earthquake in northern Japan early on Thursday led a handful of companies to halt production at plants in the affected area, but one -- Nippon Steel Corp's (5401.T) Kamaishi Works -- had resumed by midday, and others were expected to restart soon.

Oil fell $4 on Wednesday, extending its losses to more than $20 from the all-time peak above $147 a barrel hit on July 11 and helping to buoy the dollar, which at one point on Thursday touched a one-month high against the yen.

"The fundamental issue is oil, and this is helping the market become cautiously optimistic," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.

"There's a sense that investors still lack confidence, but the fall in oil has sparked some buying, and with banks likely having hit bottom, optimism may grow."