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Tokyo, June 15: The Nikkei rose 1.13 percent on Thursday as Advantest Corp. and other blue chips gained on the view that they had fallen too far in a six-week tumble, but worries about the U.S.

economy limited rises.

Mitsubishi UFJ Financial Group Inc. and other banks rang up gains after Merrill Lynch raised its rating on the sector. Bargain hunting also lifted Sumitomo Metal Mining Co. Ltd.

Tatsuo Nishimura, a portfolio manager at Meiji Dresdner Asset Management, said the market will likely remain volatile until at least June 28-29, when the next U.S. Federal Reserve policy setting meeting is held.

''I think we still need to be on the alert,'' Nishimura said.

''People say the market is near the bottom ... but investors are probably selling stocks when the market rebounds to rebuild their positions with a more defensive slant.'' The Nikkei rose 161.20 points to 14,470.76, adding to its gains the previous session. But the share average remains more than 17 percent down from its peak in early April, having been hit hard by concerns that further rises in U.S. interest rates may lead to an economic slowdown in the United States, a major market for Japanese products.

The broader TOPIX index was up 1.35 percent at 1,485.98.

Kenichi Azuma, an equity strategist at Cosmo Securities Co. Ltd., said the market lacks energy to test higher as retail investors remain on the sidelines.

''I hear from our branches that retail investors won't be investing until the Nikkei recovers to around 15,300 ... They are sitting on latent losses and there's no way they can move,'' said Azuma.

The market was largely unaffected by Bank of Japan Governor Toshihiko Fukui's appearance in parliament to apologise for the commotion caused by his investment in a fund set up by a former bureaucrat Yoshiaki Murakami. Murakami is currently under arrest for suspected insider trading.

Tsutomu Yamada, a market analyst at Kabu.com Securities Co., said investors are hoping the case will not lead to Fukui's resignation.

''We don't want any confusion,'' he said.

After the market closed, the Tokyo Stock Exchange said foreign investors sold a net 375.4 billion yen ($3.27 billion) of Japanese stocks last week, contributing to the Nikkei's biggest weekly fall since 2001.

RATINGS Banks rose after brokerage Merrill Lynch raised its rating on the sector to ''overweight'' from ''market weight'', citing recent share price declines. Mitsubishi UFJ Financial Group, whose rating Merrill lifted to ''buy'' from ''neutral'', gained 1.4 percent to 1.43 million yen.

Nikko Cordial added 3.7 percent to 1,467 yen after Moody's investors Service placed its ratings on Nikko Cordial Securities and Nikko Cordial Corporation on review for a possible upgrade.

In the technology sector, chip makers advanced after Goldman Sachs raised its ratings on Intel Corp. and other U.S. chip makers, boosting their share prices in New York trade.

Advantest, the world's largest microchip tester maker, gained 2 percent to 10,560 yen and Tokyo Electron Ltd. advanced 1.8 percent to 7,350 yen.

Non-ferrous metals shares, which missed out on the market rebound on Wednesday, lured bargain hunters this session.

Gold producer Sumitomo Metal Mining Co. jumped 5.3 percent to 1,272 yen and Toho Zinc Co. Ltd. surged 7.7 percent to 753 yen.

Drug shares fell after a report of price cuts, while the pharmaceutical sector index IPHAM.was the worst performer, with sector leader Takeda Pharmaceutical Co. Ltd. losing 3.6 percent to 6,520 yen, and Astellas Pharma Inc. dropping 3.4 percent to 3,980 yen.

Trade volume slowed with 1.7 billion shares changing hands, compared with 2.2 billion shares on Wednesday. Advancers swept past decliners by a ratio of more than six to one.

Reuters