* Nikkei clings near 10-month high, eyes 10,800 target
* Light profit-taking hits exporters as yen edges higher
* No damage from quake, construction shares gain
By Elaine Lies
TOKYO, Aug 11 (Reuters) - Japan's Nikkei stock average edged
up 0.3 percent on Tuesday towards a 10-month high, with
construction stocks like Obayashi Corp <1802.T> gaining in the
wake of an earthquake and a storm that triggered mudslides.
Nippon Sheet Glass <5202.T>, a major glass maker, surged on a
positive brokerage report but exporters slipped as the yen
advanced against the dollar.
Analysts said that while the market was vulnerable to
profit-taking after its recent gains, bargain hunting on dips
would keep the downside supported and its recent upward trend was
unchanged.
"The U.S. jobs figures have improved the consensus now so
that more people are getting a sense the economy may have
bottomed out, so the trend is upwards," said Hiroaki Osakabe, a
fund manager at Chibagin Asset Manager.
"But U.S. consumption still hasn't recovered, so there may
very well be some downward adjustments, and any rise by the
Nikkei to 12,000 is likely to take several months and require
real proof of recovery in the larger economy."
In figures announced on Friday, the U.S. unemployment rate
fell in July for the first time in 15 months as employers cut far
fewer jobs than expected and that lifted Wall Street on Friday.
[]
U.S. stocks fell on Monday as investors took profits after a
four-week rally that took the broad S&P 500 index to a 10-month
high on Friday, with the dollar's slip of 0.3 percent against the
yen to 96.81 yen <JPY=> adding more pressure to Tokyo shares.
But buying by foreign investors, primarily of futures but
also in the cash market, is helping to keep the Nikkei
surprisingly resilient, said Kenichi Hirano, operating officer at
Tachibana Securities.
The benchmark Nikkei <> gained 20.67 points to
10,554.93, heading up towards a 10-month high of 10,585.37 hit on
Monday, while the broader Topix <> rose 0.1 percent to
970.39.
The Nikkei's next target is likely to be 10,800 -- a 50
percent Fibonacci retracement from its June 2008 high and last
October's 26-year low just under 7,000 -- followed by 11,000,
roughly the level from which it fell rapidly after Lehman
Brothers failed last September.
UNSHAKEN
Major manufacturers including Suzuki Motor <7269.T>, Yamaha
Motor <7272.T>, Panasonic <6752.T>, Sony <6758.T> and Fujitsu Ltd
<6702.T> said they had not seen damage to their factories in the
area of a quake on Tuesday morning, which was centred southwest
of Tokyo. []
But construction shares gained, although Hirano at Tachibana
said the sector had been unpopular in the recent rally and also
needed to play catch-up.
Another analyst said recent floods and heavy rains had also
helped boost the sector.
Obayashi Corp <1802.T> rose 4.7 percent to 443 yen, Shimizu
Corp <1803.T> rose 2.3 percent to 397 yen and Taisei Corp
<1801.T> gained 1.8 percent to 221 yen.
The construction subindex <.ICNST.T> rose 1.6 percent,
becoming the second-biggest gainer among the subindexes.
The biggest gainer at 2.3 percent was the insurance sub-index
<.IINSU.T>, with shares such as non-life insurer Aioi Insurance
<8761.T> rising 3.5 percent to 474 yen after booking a large jump
in quarterly profit.
Daiichi Sankyo <4568.T>, Japan's third-largest drug company,
extended gains to climb 4.2 percent to 1,894 yen after it and
Australian biotech firm Biota <BTA.AX> said on Monday that a new
flu drug candidate has succeeded in late-stage trials in Asia.
Nippon Sheet Glass surged 8.6 percent to 353 yen after Bank
of America Merrill Lynch initiated coverage with a "buy" rating,
citing expectations of a significant earnings contribution from
price hikes on European construction-use glass.
But shares of exporters fell after the market hit a 10-month
closing high the previous day, tracking a decline in U.S. stocks
which also succumbed to profit-taking.
Honda Motor Co <7267.T> slipped 1.9 percent to 3,150 yen,
while electronics components maker TDK Corp <6762.T> slid 3.1
percent to 5,340 yen and chip equipment maker Tokyo Electron Ltd
<8035.T> gave up 1.3 percent to 5,140 yen.
Trade slipped on the Tokyo exchange's first section, with 867
million shares changing hands, compared with last week's
morning average of 962 million.
Advancing shares outnumbered declining ones 885 to 600.
(Reporting by Elaine Lies; Editing by Edwina Gibbs)
