* Nitto Denko contributes hefty lift to Nikkei
* Daiwa says 20 pct of companies it covers have raised full-year outlook
By Ayai Tomisawa
TOKYO, Aug 1 (Reuters) - Japan’s Nikkei share average rose on Tuesday, buoyed by companies such as Nitto Denko and Mitsui Sumitomo Financial Group reporting strong earnings, though gains were tempered by a stronger yen.
The Nikkei ended 0.3 percent higher at 19,985.79 points.
On Monday, the Nikkei fell 0.2 percent to its lowest close since June 15.
For July, it shed 0.5 percent, snapping a three-month winning streak.
The broader Topix gained 0.6 percent to 1,628.50.
Meanwhile, small-to-mid sized stocks tumbled, with the Mothers market dropping 4.0 percent.
The yen gained against the dollar, which dropped 0.2 percent to 110.01 yen earlier in the day to its lowest levels since mid-June amid U.S. political turmoil and doubts over about the prospects for another Federal Reserve rate hike this year.
With Japanese first quarter earnings in focus, Daiwa Securities said more companies were upgrading their annual outlooks compared with the same time last year.
“About 20 percent of the companies that we cover have raised their full-year profit outlooks so far, and that’s more than last year,” said Kazuhiro Takahashi, an equity strategist at Daiwa Securities.
“Most companies have conservative dollar-yen assumptions, while other companies such as factory automation equipment makers benefit from strong demand in China.”
According to the Nikkei business daily, more than 70 percent of Japan’s public companies have posted increases in their net profits.
Industrial tape maker Nitto Denko Corp, which reported its quarterly earnings on Monday, soared 3.7 percent and contributed a hefty 14 points to the Nikkei benchmark index’s gains.
It raised its profit outlook for the April-September period thanks to strong demand for optical film used in smartphones. It now expects an operating profit of 65 billion yen for the first half, up from previously forecast 47.5 billion yen.
Elsewhere, Sumitomo Mitsui Financial Group surged 2.3 percent after the bank’s net profit for the April-June quarter rose 31 percent, helped by the sale of stock holdings.
Japan Airlines rose 2.8 percent after it raised its net profit outlook to 108 billion yen from 100 billion yen for the year through March and increased its annual dividend payout outlook to 96 yen per share from 90 yen. (Reporting by Ayai Tomisawa; Editing by Eric Meijer)