* Orix, ANA fall after sources say they will issue shares
* Construction machinery makers rise after China PMI
* Gains in Asian shares, yen's weakness lend support
* Some talk of buying by retail investors, overseas players
By Masayuki Kitano
TOKYO, July 1 (Reuters) - Japan's Nikkei average rose 1 percent on Wednesday, helped by firmness in other Asian equity markets, with construction makers such as Komatsu climbing on data showing a continued recovery in China.
But shares in Orix Corp and All Nippon Airways slid after sources familiar with the matter said they were set to announce large public share offerings.
Tokyo shares extended their gains in the afternoon amid some talk of buying by overseas investors at the start of the year's second half, as well as short-covering by retail investors.
The yen's fall against the dollar and the euro also lent support, with exporters such as Nissan Motor edging higher.
The firmness in Tokyo shares over the past couple of days has been a bit of a surprise, said Hiroaki Osakabe, fund manager at Chibagin Asset Management.
"Part of it may be that it is hard to go short ahead of economic data, especially since most indicators have been showing improvement," Osakabe said, adding that a focal point later in the day would be the U.S. Institute for Supply Management's index of national factory activity.
Brokerage CLSA's China Purchasing Managers' Index rose in June to an 11-month high of 51.8 and China's official purchasing managers' index (PMI) for June also showed China's economic recovery is on more solid ground.
"Since Japan exports a lot to China, such data is positive for Japanese shares," said Hideyuki Ishiguro, supervisor for Okasan Securities' investment strategy department.
The Nikkei rose 102.64 points to 10,061.08 on the first day of a new quarter, adding to the hefty gains made in April-June, when it jumped 23 percent for its best quarterly gain in about 14 years. The broader Topix rose 0.8 percent to 937.58.
One equities trader cited talk that overseas investors were buying Tokyo shares at the start of the year's second half, adding that overseas pension funds may be behind the moves.
Orix Corp fell 3.4 percent to 5,610 yen after three sources said Japan's biggest leasing firm and a major property investor plans to raise about 100 billion yen ($1 billion) through a public share offering.
All Nippon Airways Co, Japan's No. 2 airline, plans to raise more than 150 billion yen ($1.6 billion) in a public share offering, five sources familiar with the matter said, sending its shares tumbling 5.3 percent to 319 yen.
Construction machinery makers rose after the China PMI data, with Komatsu climbing 3 percent to 1,537 yen and Hitachi Construction Machinery gaining 2.7 percent to 1,617 yen.
Among exporters, Nissan Motor rise 1.2 percent to 593 yen and Honda Motor gained 1.3 percent to 2,695 yen. Response to the Bank of Japan's quarterly survey of business confidence was mixed, with some analysts saying it had no impact on the market, but others, noting lagging capital spending, saying it was slightly negative.
The euro hit a two-week high against the yen of 135.97 yen on trading platform EBS on Wednesday.
Elsewhere in Asia, Taiwan shares climbed 2.3 percent and South Korean shares clawed up 1.4 percent. (Additional reporting by Takeshi Yoshiike and Elaine Lies; Editing by Edwina Gibbs)