*Nikkei up 2.2 pct at 4-week closing high

*Soft yen and slide in oil prices eases earnings concerns

*Canon reports 12 pct fall in Q2 profit, keeps '08 outlook (Adds trade volume, details)

By Aiko Hayashi

TOKYO, July 24 (Reuters) - Japan's Nikkei average rose 2.2 percent on Thursday to a four-week closing high, as Toyota Motor Corp (7203.T: Quote, Profile, Research) and other carmakers led gains by exporters on a softer yen versus the dollar and a drop in oil prices.

Toray Industries (3402.T: Quote, Profile, Research) and Mitsubishi Rayon (3404.T: Quote, Profile, Research) surged on plans to work with other firms to develop a new carbon fibre material for cars which would lighten vehicles for better fuel efficiency. [ID:nT313639]

Sentiment improved as a weaker yen and a slide in oil prices to a six-week low overnight eased some concerns about corporate earnings, and on hopes for a rescue plan for mortgage U.S. finance companies Fannie Mae (FNM.N: Quote, Profile, Research) and Freddie Mac (FRE.N: Quote, Profile, Research).

But further gains may be limited ahead of Japanese corporate earnings which kick off next week.

"There are fewer reasons to sell, but investors still can't buy aggressively as concerns about U.S. financials haven't been completely wiped away and investors want to see how first quarter earnings turn out," said Naoki Koga, senior fund manager at Toyota Asset Management.