Nikkei falls 0.8 pct after rally; data, poll eyed

                                
 * Profit-taking weighs on market after 3.4 pct jump
                                
 * Exporters slide after leading rally; trade thin
                                
 * Eyes on U.S. housing data, Japan's Aug. 30 election
                                
 By Aiko Hayashi
                                
 TOKYO, Aug 25 (Reuters) - The Nikkei average fell 0.8 percent
on Tuesday as exporters such as Canon Inc <7751.T> took a
breather after a rally the previous day, while investors focused
on Japan's Aug. 30 general election and U.S. economic data.
                                
 Market analysts say many expect Japan's opposition Democratic
Party to gain power but investors remain hesitant about actively
taking positions before they see the results, though some say the
election has already become a neutral trading factor. [ID:nPOLJP]
                                
 "The market is facing profit-taking for now, but downward
pressure isn't so strong either, as U.S. stocks didn't fall too
much and the dollar/yen is still trading around 94.5 yen," said
Yutaka Miura, a senior technical analyst at Mizuho Securities.
                                
 "Investors are also paying attention to U.S. economic
indicators, which have been mixed lately, to see if the economy
is steadily improving."
                                
 The market will closely watch economic data out of the United
States such as Case-Shiller home price indexes due later in the
day for further clues about the progress of an economic recovery.
                                
 In thin trade, the benchmark Nikkei <.N225> slipped 82.86
points to 10,498.19. It jumped 3.4 percent the previous day,
erasing a decline posted last week.
                                
 The broader Topix <.TOPX> retreated 0.5 percent to 965.25.
                                
 U.S. stocks ended the day barely changed on Monday as
investors took a break from a four-day rally that lifted major
indexes to 10-month highs. [.N]
                                
 In Japan, opinion polls show the main opposition Democratic
Party of Japan ahead of the LDP. A solid win for the Democrats
would raise the chance of clearing a policy deadlock in
parliament, where the opposition controls the upper house.
                                
 "If the Democratic Party were to win, a landslide victory
would be better. Otherwise, policies would lack a specific
direction," said Kazuhiro Takahashi, general manager at Daiwa
Securities SMBC.
                                
 "Once a change in the government becomes a reality, risks
related to that change and the Democrats' ability to lead the
country will be in focus."
                                
 EXPORTERS WEIGH
                                
 Canon, the world's largest digital camera maker, slipped 1.3
percent to 3,670 yen.
                                
 Sony Corp <6758.T> fell 1 percent to 2,495 yen and Tokyo
Electron <8035.T> shed 2.1 percent to 5,150 yen. Honda Motor Co
<7267.T> declined 1.3 percent to 3,010 yen.
                                
 Toyota Motor Corp <7203.T> dipped 0.5 percent to 4,050 yen.
The Asahi newspaper reported on Tuesday the world's largest
carmaker plans to raise its daily production level in Japan in
November compared with a year earlier for the first time in 16
months, thanks to a recovery in demand. [ID:nT44448]
                                
 But NGK Insulators <5333.T>, a producer of insulators for
power utilities and high-energy density batteries, jumped 4.1
percent to 2,280 yen after the Nikkei business daily said it had
received 60 billion yen in orders from Abu Dhabi for rechargeable
batteries to use in power systems.
                                
 Some 867 million shares changed hands on the Tokyo exchange's
first section, below last week's morning average of 972 million.
                                
 Declining stocks outnumbered advancing ones by 2 to 1.
 (Editing by Edwina Gibbs)