* Nikkei +0.1 pct, Topix +0.1 pct * Nikkei still -9 pct YTD as investors wary of outlook * Defence contractors gain on news of export-ban lift * Insurers hit by report of heavy snow-related payouts By Tomo Uetake TOKYO, Feb 24 (Reuters) - Japan's Nikkei share average climbed to a three-week high in choppy trade on Monday morning as speculators jumped on a slight weakening in the yen to cover their short positions.

But many investors stayed on the sidelines looking for clearer signs of improvement in Japanese corporate earnings, giving no more than a passing nod to the Group of 20's latest commitment to spur faster global growth.

The benchmark Nikkei gained as much as 0.8 percent to 14,982.53 - its highest level since Jan. 31 - after rising 2.9 percent on Friday. It pared gains and ended the morning session 0.1 percent higher at 14,880.72.

Although the Nikkei initially fell, speculators bought back Nikkei futures , as the yen's slight fall automatically kicked in popular algorithm-driven trades to sell the yen and buy Nikkei shares.

That was a popular strategy last year, when the Nikkei jumped 57 percent and the dollar gained 21 percent on the yen. But the benchmark is still down nearly 9 percent so far this year, making it one of the worst performing markets.

Traders said many long-term investors refrained from making big bets as emerging market woes and a possible slowdown in the U.S. economy, weather-related or not, could undermine their rosy view of Japanese earnings.

"We are not out of the woods yet in terms of getting clarity on which direction this market is going. There is a little bit of bears and obviously still quite a lot of bulls in the market but we haven't convincingly got out of this potential correction phase," said Stefan Worrall, director of equity cash sales at Credit Suisse in Tokyo.

Japanese defence contractors were in demand after Reuters reported that the government has drafted new guidelines that would reverse a decades-old ban on weapons exports, citing a source with knowledge of the matter.

Mitsubishi Heavy Industries Ltd rose 1 percent and Kawasaki Heavy Industries Ltd added 1.2 percent.

INSURANCE SECTOR HIT But the insurance sector was the worst performer among the Tokyo Stock Exchange's 33 subindexes, falling 1.1 percent. The sector was hurt by growing concerns that insurance payments related to heavy snow this month could reach unprecedented levels.

The Nikkei business daily reported on Monday that the country's top three insurers may need to pay a total of 60 billion yen ($584 million).