* Rare joint probe by police, prosecutors, regulators

* Shares ease after surge but raids not considered a factor

By James Topham and Yoko Kubota

TOKYO, Dec 21 (Reuters) - Japanese prosecutors raided offices of Olympus Corp and the home of a former executive on Wednesday in a probe into a $1.7 billion accounting scandal that has threatened the survival of the once-proud camera and medical equipment maker.

Tokyo prosecutors, police and financial regulators have joined forces in a rare joint investigation of the 92-year-old company, which has admitted to hiding huge investment losses via questionable M&A deals and other accounting tricks stretching back over two decades.

Public broadcaster NHK showed dozens of black-suited investigators marching double-file into an office building that houses three Olympus subsidiaries acquired under one of the loss-making schemes, in what has become one of Japan's biggest corporate scandals.

Investigations moved into high gear after a panel of experts appointed by Olympus to probe the scandal said early this month that two senior former executives masterminded the scheme with the help of investment bankers. It also found that three ex-presidents, including Tsuyoshi Kikukawa who resigned in October over the scandal, had known about the cover-up.

Japanese TV also showed investigators raiding Kikukawa's residence, as well as Olympus headquarters in a high-rise office district on the western edge of central Tokyo.

Olympus acknowledged the raids in a statement.

"We will continue to cooperate fully with investigative authorities in order to bring the facts to light," it said.

"We would again like to apologise deeply for causing great trouble and worry for our shareholders, investors and those we do business with."

MOVING ON

Olympus last week filed five years of corrected accounts, plus overdue first-half results, meeting a Tokyo Stock Exchange deadline to avoid a humiliating delisting, but revealing a much-depleted balance sheet as it tries to put the scandal behind it.

The company could still face delisting if the exchange deems that the company's accounting deceit was sufficiently grave.

Ex-CEO Michael Woodford, who blew the whistle on the scandal after being fired in October, is campaigning to get his job back, but faces long odds in his battle with current management, which is expected to get backing from its bankers for a plan to bring in outside investors to bolster the company's finances.

"I'm tremendously sad that it's come to this, especially when it could have been avoided depending on the actions of upper management," Olympus employee Masaharu Hamada said outside the company's headquarters as it was being raided.

Hamada has taken legal action against the company in a case unrelated to the accounting scandal, charging that he was subjected to harassment by management after reporting a compliance breach by his supervisor. A lower Tokyo court has ruled in his favour and the case is now on appeal.

Several dozen reporters and camera operators waited near the headquarters entrance after word leaked that raids were likely at some point during the day, while TV footage showed others chasing a car-load of investigators who drove into an underground garage.

Prosecutors' raids are often telegraphed to the media in advance to allow TV cameras to film the event.

Olympus' shares were down 0.7 percent at 1,058 yen at midafternoon, giving up early gains that extended a 16 percent surge the day before.

The shares had been under pressure as expectations of a capital raising by the company to shore up its finances stoked fears that existing shareholdings would be diluted, but the market's attention has begun shifting to the company's finances and future prospects.

"It's becoming likely that Olympus will stay listed and there's already talk of a capital injection," Tetsuro Ii, the president of Commons Asset Management.

He did not think the prosecutors' raids or any subsequent arrests would have a major impact on the shares.

The market took a favourable view of a media report on Tuesday that Olympus plans to issue about 100 billion yen ($1.3 billion) in new shares, with high-tech blue-chips such as Sony and Fujifilm seen among possible buyers.

• A Permanent Economic Emergency