Nikkei edges higher, but gains capped by weak banks

TOKYO, Dec 28 (Reuters) - Japan's Nikkei share average edged up on Thursday, although wider gains in industrial-related stocks were offset by weakness in banking shares as activity waned heading into the year-end.

The Nikkei was up 0.15 percent at 22,945.67 at the end of morning trading. The broader Topix was nearly flat, up 0.01 percent at 1,829.99.

Friday is the last trading day of 2017, for which the Nikkei is on track to have gained more than 20 percent.

Stronger sectors included textiles, up 0.6 percent, iron and steel, up 0.6 percent, and non-ferrous metals, up 0.7 percent.

The banking subindex slumped 0.7 percent, with Mitsubishi UFJ Financial Group down 1.3 percent.

Idemitsu Kosan Co shares dropped 1.8 percent. The oil company's founding family, locked in a battle with the firm's management over a proposed integration with smaller rival Showa Shell Sekiyu, said it had further increased its stake in Idemitsu by about half a percentage point to about 28.5 percent.

Nippon Sheet Glass Co fell 3.1 percent, a day after it cut its fiscal year net profit forecast.

Underpinning market sentiment, data released early on Thursday showed Japan's industrial output rose more than expected in November and companies forecast a further increase in December as robust overseas demand continues to support factory activity and broader economic growth.

Separate capital flows data showed foreign investors turned net buyers of Japanese stocks for the week ending on Dec. 23.

(Reporting by Lisa Twaronite; Editing by Sam Holmes)