Nikkei flat after hitting technical resistance

* Nikkei runs into resistance below 9,500

* Shippers surge on key freight index gain

TOKYO, May 29 - The Nikkei average was little changed on Friday, handing back early gains after running into technical resistance, but Mitsui O.S.K and other shipping companies steamed higher after a key industry index rose to an eight-month high on Thursday.

Toshiba climbed 1.7 percent to 354 yen after public broadcaster NHK reported that the company planned to raise its chip production level in July back to where it was before cuts began in January.

Oil and gas field developer Inpex and other oil-linked shares climbed after U.S. crude oil futures rose on Thursday to over $65, a six-month high, on government data showing a steep drop in oil inventories last week.

"From a technical point, the Nikkei faces selling pressure ahead of 9,500 after climbing above the 200-day moving average midway through the week," said Yumi Nishimura, deputy general manager of the investment advisory section of Daiwa Securities SMBC.

The benchmark Nikkei rose 1.37 points to 9,452.76, while the broader Topix dipped 0.3 percent to 892.62.

"Industrial output was also much better than anticipated, but the market appears to have priced in the good numbers mostly beforehand while looking beyond to other less than encouraging data," Nishimura continued.

Japan's industrial output jumped 5.2 percent in April from the previous month, marking the second straight month of increase as companies continue to restock after a heavy run-down of inventories late last year.

The upbeat production figures were partially offset by other indicators released on Friday showing that domestic demand was still fragile.

The jobless rate rose to a 5-½ year high of 5.0 percent in April, while household spending fell 1.3 percent from a year earlier and the country stepped deeper into deflation.

SHIPPERS ADVANCE

The Baltic Exchange's main sea freight index, which gauges the cost of shipping resources including iron ore, cement, grain, coal and fertiliser, rose on Thursday to an eight-month high, helped by China's demand for goods.

Mitsui O.S.K. Lines rose 3.4 percent to 665 yen, Kawasaki Kisen gained 4.2 percent to 422 yen, and Nippon Yusen climbed 4.2 percent to 451 yen.

The sea transport sub-index jumped 3.8 percent, becoming one of the biggest gainers among the sub-indexes.

Oil developer Inpex rose 6.2 percent to 770,000 yen and Showa Shell Sekiyu gained 2 percent to 924 yen. Nippon Oil rose 1 percent.

Japan's largest retailer Seven & I Holdings Co Ltd fell 2.8 percent to 2,275 yen after media reports that Japan's Fair Trade Commission plans to order the company's convenience store unit to stop restricting merchandise markdowns by franchisees.

Citing sources familiar with the matter, Kyodo News said the FTC has found that Seven-Eleven Japan has been forcing store franchisees not to cut prices even when some stores wanted to clear food items that were near their expiry dates, a practice deemed by the watchdog to be an abuse of the retailer's dominant position.