* Trading firms, steel, metal stocks up on commodity prices
* Banks jump helped by bullish views on US financial sector
* Yen weighs but optimism about earnings supports -analyst
By Aiko Hayashi
TOKYO, Oct 7 (Reuters) - Japan's Nikkei average rose 0.9 percent on Wednesday, with shares such as steel, metal stocks as well as trading houses making strong gains in the wake of a jump in commodity prices.
A rate hike from Australia, the first G20 country to raise interest rates since the onset of the financial crisis, has underscored for many that the global economy is on the mend, spurring gains in energy and metal prices.
Bank shares like Mitsubishi UFJ Financial Group also advanced on continued optimism about the U.S. financial sector, while electronics conglomerate Hitachi soared on a two-notch rating upgrade.
"An increasing number of brokers are turning bullish on U.S. financial stocks and that's prompting investors to adjust positions in Japanese financials that had lagged behind," said Tsuyoshi Segawa, an equity strategist at Mizuho Securities.
Goldman Sachs upgraded this week the U.S. large-cap bank sector, saying share prices for companies in the industry didn't reflect their earnings power. The news has helped boost both U.S and Japanese financial shares.
In moderate trade, the benchmark Nikkei gained 86.45 points to 9,778.25, after inching up 0.2 percent the previous day. Last week, the index shed 5.2 percent, its worst weekly loss in about three months.
The broader Topix added 1.3 percent to 883.12.
But worries about a stronger yen were capping gains, said Yumi Nishimura, deputy general manager at Daiwa Securities SMBC.
"Even so, investors don't really want to sell too aggressively as there's no serious concern about earnings both in Japan and the United States ahead of the upcoming earnings season and the markets could move higher," she said.
BANKS, TRADING HOUSES SHINE
Most gains in financials stocks were due to short-covering, market players said.
Japan's top bank, Mitsubishi UFJ Financial Group, jumped 5.3 percent to 500 yen and Mizuho Financial Group added 2.7 percent to 189 yen. Nomura Holdings, the country's biggest brokerage, rose 1.3 percent to 626 yen.
Shares of trading houses climbed as higher commodity prices will positively impact their earnings, market players said. Mitsubishi Corp, Japan's largest trading house, gained 5.3 percent to 1,855 yen and fellow trader Mitsui & Co climbed 5.1 percent to 1,173 yen.
Metal stock Dowa Holdings jumped 6 percent to 544 yen while steelmaker JFE Holdings rose 5.3 percent to 3,060 yen.
Hitachi shot up 8.1 percent to 295 yen after Mizuho Securities upgraded its rating to a "1" from a "3", saying the company was highly likely to achieve its earnings targets partly due to a strong performance for its hard disk drive business.
Murata Manufacturing, an electronic parts maker, advanced 3.2 percent to 4,170 yen after its president told Reuters in an interview that orders in the quarter just ended were stronger than expected.
But Aeon Co lost 1.7 percent to 816 yen after Japan's second-largest retailer posted a 40 percent decline in its first-half operating profit, hit by weak consumer spending and after analysts complained about a lack of disclosure at its analysts' meeting.
Some 1.1 billion shares changed hands on the Tokyo exchange's first section, above last week's morning average of 928 million.
Advancing stocks outnumbered declining ones, 994 to 547. (Reporting by Aiko Hayashi; Editing by Edwina Gibbs)