Nikkei up as large cap stocks rebound; growth woes cap gains

* Nishimatsuya dives after co cuts annual profit forecast

* Weaker oil prices lift utility cos

By Ayai Tomisawa

TOKYO, Dec 17 (Reuters) - Japan's Nikkei rose on Monday, recouping some of the sharp losses seen at the end of last week as investors picked up battered shares, but the upside was curbed by rising concerns over global growth.

The Nikkei share average .N225 rose 0.6 percent to 21,506.88, after it slumped 2 percent on Friday on the back of grim Chinese data which also knocked Wall Street.

"The market seems to be digesting concerns about global growth and some of these worries have been priced into the market for now," said Toru Ibayashi, executive director of Wealth Management at UBS Securities Japan

However, analysts said investors are still cautious about further signs of a slowdown in global growth - a factor reflected in the underperformance of the Topix .TOPX , which only rose 0.1 percent to 1,594.20.

Declining issues outnumbered advancing ones 1,420 to 648.

"Large cap stocks were the main losers on Friday, so investors bought back as selling is thought to be overdone," said Hikaru Sato, a senior technical analyst at Daiwa Securities. "But mid-to-small cap stocks are still struggling as investors are still reluctant to go long for the overall market."

Machinery and technology shares gained after selling off on worries about China's weak retail growth and industrial output data.

Advantest Corp 6857.T jumped 2.1 percent, while Tokyo Electron 8035.T and TDK Corp 6762.T both gained 1.8 percent.

Weaker oil prices lifted utility shares on hopes of lower costs. Tokyo Electric Power Co 9501.T gained 3.0 percent and Chubu Electric Power Co 9502.T added 1.9 percent.

On the other hand, mining stocks lost ground. Inpex Corp 1605.T fell 1.7 percent.

The weak China data fanned worries about lower fuel demand in the world's biggest oil importer, sending oil prices down about 2 percent on Friday before they edged up in Asian trade on Monday. the stronger market, discount children's wear operator Nishimatsuya Chain 7545.T nosedived 8.6 percent after the company cut its full-year net profit forecast by 42 percent to 3.33 billion yen ($29.3 million) for the year ending February due to weak sales of baby clothes.

Office supply company Askul Corp 2678.T tumbled 6.5 percent after its pre-tax profit dropped 54.5 percent on year to 958 million yen for the first half ended November hit by rising delivery costs amid driver shortage.

($1 = 113.4900 yen) (Editing by Jacqueline Wong & Shri Navaratnam)