(Adds dropped word "said" in paragraph 6)
* Nikkei has fallen 6 pct for the week
* China woes, geopolitical tensions will likely persist - traders
* Fast Retailing contributes hefty negative points to Nikkei after cutting outlook
By Ayai Tomisawa
TOKYO, Jan 8 (Reuters) - Japan's Nikkei share average rose for the first time in five days on Friday in volatile trade after China set the yuan's midpoint rate higher and Chinese stock markets rebounded, easing some pressure on battered global markets.
The Nikkei rose 0.8 percent to 17,902.97 points by midmorning, after falling to as low as 17,509.64 earlier, the lowest level since Oct. 1.
But Fast Retailing Co, operator of Uniqlo clothing stores, capped the Nikkei's gains. It tumbled 5.8 percent and sliced a hefty 90 points off the Nikkei after it cut its full-year outlook.
The Nikkei has already fallen 6.0 percent for the week, hit by a slew of negative catalysts ranging from China's currency woes and slumping stock markets to escalating tensions in the Middle East and a North Korea nuclear test.
On Friday, the People's Bank of China set the yuan's midpoint rate stronger for the first time in nine days after allowing it to sharply depreciate in recent session.
"While the market was left with uncertainty on how far the yuan will fall, the Chinese central bank's action was taken as a signal that it does not intend to keep allowing the yuan to fall," said Yoshinori Shigemi, a global market strategist at JPMorgan Asset Management.
Even though sentiment was restored for now, Shigemi said that the downside risks may persist in the Japanese market.
"What we are seeing now is a rehash of what we were seeing last year," Shigemi said, adding that worries about the Chinese economy and geopolitical tensions in the Middle East as well as weak oil prices could pull down the market even further in the coming months.
Traders also said that with the Nikkei falling to attractive levels, bargain hunters such as retail investors and pension funds like the Government Pension Investment Fund will likely support the market.
"What looks like buying by pension funds has been supporting the market since the open," said Norihiro Fujito, a senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
Exporters gained ground after the yen reversed course and dropped against the dollar after China's latest yuan fixing move. Toyota Motor Corp rose 1.1 percent, Honda Motor Co climbed 1.3 percent and Advantest Corp jumped 5.2 percent.
The broader Topix gained 0.3 percent to 1,463.00 and the JPX-Nikkei Index 400 rose 0.4 percent to 13,175.19. (Editing by Kim Coghill)