* Fanuc up on upbeat Morgan Stanley MUFG note * Renesas sags on capital-raising plan * Nomura falls; sources say linked to 2nd insider case TOKYO, May 28 (Reuters) - Japan's Nikkei average steadied on Monday as gains in industrial robot maker Fanuc Corp on the back of a bullish broker note helped offset weakness in Japan's top investment bank Nomura Holdings and Renesas Electronics Corp. The Nikkei was flat at 8,583.81, holding below its five-day moving average near 8,603, a nd still in "oversold" territory, wi th its 14-day relative strength index at 28.7. The benchmark fell for an eighth straight week last week to log its worst weekly losing streak in 20 years, and is down 16.3 percent since hitting a one-year high on March 27 as concerns about the impact of a possible Greek exit from the euro zone and worries over slowing global growth intensified. "The market has been panicking for eight weeks. It's probably not sensible to forecast exactly when it will cease panicking. It's important to consider what it focuses on when it ceases panicking, which is probably the extreme valuations," said Nicholas Smith, Japan strategist at CLSA. "The further it falls, the more it should rebound when the market comes to its senses," he said, pointing to real estate companies and Sumitomo Mitsui Financial Group as among stocks on which to focus. Index heavyweight Fanuc gained 0.5 percent after Morgan Stanley MUFG raised its price target on the producer of industrial robots for smartphone makers and suppliers, saying a recent correction in the stock was overdone. Gains in Toyota Motor Corp, Honda Motor Co and Canon Inc after a recent battering, up between 0.3 and 0.6 percent, also supported the market. Renesas Electronics Corp sank 10.6 percent after news over the weekend that the chipmaker plans to raise more than 100 billion yen ($1.3 billion) to pay for a proposed restructuring aimed at turning around its business. Also weighing on the market, Nomura Holdings Inc dropped 1.2 percent after Japan's largest broker was linked to a second insider trading case involving a fund management arm of Sumitomo Mitsui Trust Holdings Inc. Sumitomo Heavy Industries Ltd sagged 6.4 percent after the company said on Friday that its contract with the Ministry of Defense had been suspended due to over-reporting of expenses. The broader Topix slipped 0.2 percent to 720.59. Underlining the gloomy outlook, the Topix's one-month earnings momentum - analysts' earnings upgrades minus downgrades as a total of estimates - slowed to 0.1 percent from 5.4 percent last month after rebounding in recent months, Thomson Reuters Datastream data showed.