* Nikkei rises 2.7 pct for the week
* Spotlight on regional bank merger news
* G20 meeting in focus
By Ayai Tomisawa
TOKYO, Feb 26 (Reuters) - Japan's Nikkei soared to a 2 1/2-week high on Friday morning after risk sentiment recovered on Wall Street's gains and the weak yen, but individual stocks such as Sharp Corp were also in focus.
Sharp 6753.T stumbled 15 percent after Taiwan's Foxconn said it was delaying the signing of a deal to take over the company. On Thursday, it ended 14 percent lower ahead of Foxconn's statement.
Sources told Reuters that Foxconn had put the takeover on hold after discovering previously undisclosed contingent liabilities that amounted to "hundreds of billions of yen". Nikkei .N225 rose 0.6 percent to 16,241.89 in mid-morning trade after rising to as high as 16,472.50 earlier, the highest since Feb. 9. The benchmark index has gained 2.7 percent for the week.
The Nikkei has recovered 10 percent from the 14,865.77 hit earlier this month, a level not seen since October 2014, as panic selling caused by low oil prices and the strong yen paused. But analysts said that concerns about these factors still outweigh optimism, and it may take some time for the market to regain its confidence.
"People are still worried about the global economic slowdown. The focus now is on whether financial leaders can cooperate and deliver a message to soothe investor sentiment," said Kazuhiro Takahashi, an equity strategist at Daiwa Securities.
With fears about the recent market turmoil still lingering, investors are looking for reassurance from the finance ministers and central bankers of the Group of 20 nations, who are gathered in Shanghai for a two-day meeting starting Friday.
In Friday trade attention was on the banking sector after merger talks among regional banks. Eighteenth Bank Ltd 8396.T jumped 12 percent after it and Fukuoka Financial Group 8354.T agreed to merge next year. dollar flirted with 113.00 yen JPY= , almost two yen higher from this week's trough, helping exporter shares to perform well. Honda Motor Co 7267.T rose 2.0 percent, Panasonic Corp 6752.T added 2.0 percent and Tokyo Electron Ltd 8035.T surged 2.2 percent.
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