By Hideyuki Sano
TOKYO (Reuters) - Japanese shares advanced on Tuesday, taking heart from a solid session on Wall Street, but gains were limited below the two-week intraday high marked the previous day on caution over upcoming earnings reports and tensions in Ukraine.
The Nikkei average was up 0.3 percent at 14,556.03 in midmorning trade, continuing its recovery from a six-month low of 13,885.22 hit on Monday last week, after U.S. stocks extended gains into a fifth day.
But the Nikkei traded below Monday's high of 14,649.50, with one major resistance level looming at 14,758, the bottom of the daily Ichimoku cloud.
In the coming weeks, many Japanese companies will be reporting earnings and issuing guidance for the new fiscal year that ends in March 2015.
Investors expect earnings growth of around 10 percent on the whole this fiscal year, but some anticipate that company executives might release more conservative forecasts.
Indeed, shares of Yaskawa Electric slid 6.5 percent on Tuesday after the firm's guidance for the year to next March fell short of market expectations.
Tensions over the situation in Ukraine appeared to be playing less of a role for now, but some investors think markets will remain vulnerable to more shocks.
"I don't think this will lead to a military conflict. Nonetheless, towards the presidential election in Ukraine (planned for May 25), more tensions are likely and there will be phases where share prices will be hit," said Soichiro Monji, chief strategist at Daiwa SB Investments.
Following a gunfight that killed at least three on Sunday, Washington and Moscow each continued to put the onus on the other to ensure tensions are eased.
Washington threatened to impose additional sanctions against Russia "in days" if Russia does not implement an agreement struck last week.
Still, bulls hope that the Nikkei could break through resistance to retest its April 3 high of 15,164.
"Given the favourable conditions in U.S. share markets and the yen's weakening, I bet the Nikkei will rise to 15,000," said Yutaka Miura, a senior technical analyst at Mizuho Securities.
The yen extended its incremental decline since early April to hit a two-week low of 102.73 yen to the dollar, providing some support to exporters' shares.
Automakers Toyota Motor and Honda Motor rose 0.6 percent and 0.2 percent, respectively. Fanuc, a maker of industrial robots, gained 0.7 percent.
The broader Topix advanced 0.4 percent to 1,175.54, while the new JPX-Nikkei Index 400 added 0.4 percent to 10,697.01.
Trading volume so far was similar to its levels on Monday, when volume was almost 30 percent below its average for the past 100 sessions.
(Editing by Chris Gallagher)