* Topix rebounds after hitting 28-yr low on Monday
* Canon rises on share buyback plan; Sony regains 1,000 mark
* Fast Retailing sinks after weak Uniqlo same-store sales
* Olympus up, report of capital raising via share placement
By Dominic Lau
TOKYO, June 5 (Reuters) - Japan's Nikkei average rose on Tuesday and looked set to end a four-session losing run, with investors cutting bearish bets ahead of emergency talks by the G7 industrialised powers on the euro zone crisis.
The Nikkei advanced 0.6 percent to 8,345.56 by the midday break, helped as Canon Inc rose 3.7 percent on plans to buy back up to $640 million worth of its own shares. The camera and printer maker was the top-weighted gainer and the most heavily traded stock on the main board by turnover.
The broader Topix index gained 1 percent to 702.62, regaining the 700-mark after hitting its lowest in more than 28 years on Monday.
Naomi Fink, Jefferies' Japan equity strategist, said, however, that she remained long volatility and short securities and banks.
"There are still quite a lot of event risks, so I am not getting out of that vol position anytime soon ... Today there is a short-covering rally going on," Fink said.
"Factory orders were not as good as expected from the U.S. People are wondering whether policies in China are going to be conducive for revitalisation. I don't see that optimism coming out just yet."
The emergency talks by the G7 finance chiefs on Tuesday come as alarm is intensifying over strains in the 17-nation European currency area.
Olympus Corp, which is struggling to recover from an accounting scandal, climbed 3.9 percent after the Sankei newspaper reported that it is considering raising about 50 billion yen ($640 million) through a third-party share allotment.
Sony Corp gained 2.6 percent to above 1,000 yen, after falling below that level to its lowest close in 32 years on Monday.
But Fast Retailing Co Ltd, a widely held stock, lost 6.4 percent after reporting May same-store sales at its Uniqlo shops had dropped by around 10 percent.
Fast Retailing is still up 17.7 percent this year, outpacing the broader market, and carries a 12-month forward price-to-earnings of 20.4, nearly double that of the Topix index.
Trading volume on the Topix after the halfway point was relatively light, at 42 percent of its full daily average for the past 90 days.
The benchmark Nikkei has shed 18.6 percent since hitting a one-year peak on March 27 and is down 1.3 percent for the year on concerns over the deepening euro zone debt crisis and slowing growth in the United States and China.
Despite Tuesday's gains, the Nikkei was still deep in "oversold" territory, with its 14-day relative strength index at 27. Thirty or below is deemed oversold.
Nomura recommended investors focus on reconstruction-related stocks amid the euro zone crisis and highlighted roading paving company Nippo Corp, Shikoku Chemicals Corp, Maruichi Steel Tube Ltd and home improvement store operator Komeri Co Ltd among its stock picks.
"It will be some time before investors lose their risk aversion mindset and focus on these [corporate earnings and valuations] positives instead," Nomura said in a report.
"Until Japanese equities start to turn upward again, we think the focus of investors will be on companies likely to achieve profit growth." ($1 = 78.2800 Japanese yen) (Editing by Edwina Gibbs)