Nikkei dips on profit-taking; China move eyed

* Nikkei slips on profit-taking after China tightening

* Resource shares weigh after recent rises

* JAL falls by daily limit, but broader market impact slight

By Elaine Lies

TOKYO, Jan 13 (Reuters) - Japan's Nikkei stock average fell 0.5 percent on Wednesday as profit-taking and a stronger yen hit exporters such as Canon Inc (7751.T), while resource shares slipped after China's central bank started tightening monetary conditions.

China's central bank signalled in its open market operations on Tuesday it was tightening monetary conditions at a faster-than-expected pace in response to increasing concerns about its economy overheating, a move that came after Tokyo market hours. [ID:nTOE60B020]

"Though of course this move raises concern that China's economic growth could cool, it was expected at some point. It simply came sooner than thought," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.

"It's really more to deal with an economy that was increasingly overheating. It won't really stop the recovery, just prevent economic bubbles from growing too big."

The benchmark Nikkei .N225 shed 58.92 points to 10,821.83 after closing at a 15-month high of 10,879.14 on Tuesday. The broader Topix .TOPX dipped 0.1 percent to 953.49.

The Nikkei's relative strength index (RSI) on Tuesday rose to 72, a signal that the index is overbought, with market players saying some downward adjustment -- particularly in resource shares, which have gained recently -- was only natural.

Japan Airlines 9205.T tumbled to a record low of 7 yen, the second consecutive day it has fallen by its daily limit of 30 yen, on growing expectations the airline is headed for bankruptcy and a delisting from the Tokyo exchange, but analysts said its impact on the overall market was negligible. [ID:nTOE60A04W]

WALL STREET WOES

Adding to the negative tone was a fall on Wall Street, where the S&P 500 .SPX snapped a six-day rising streak after a senior U.S. official said President Barack Obama is considering a levy on financial services firms to recoup losses from the Troubled Asset Relief Program.

Shares of Alcoa Inc (AA.N) fell 11 percent as the aluminium company's weaker-than-expected results weighed on sentiment after investors had hoped Alcoa would kick off the latest quarterly earnings season on a positive note. [.N]

Resource-linked shares slipped, with metals shares hit particularly hard after commodity markets around the world slumped Tuesday in the wake of the China move.

Ferronickel producer Pacific Metals (5541.T) lost 2.9 percent to 698 yen, smelter Toho Zinc (5707.T) fell 2.1 percent to 468 yen and fellow smelter Dowa Holdings (5714.T) shed 2.4 percent to 530 yen.

Toyota Motor Corp (7203.T) and other exporters slipped after the dollar fell more than 1 percent against the yen on Tuesday. It was roughly flat at 91.04 yen JPY= on Wednesday.

Toyota lost 0.6 percent to 4,090 yen, Canon shed 0.6 percent to 3,925 yen and Kyocera Corp (6971.T) fell 1.4 percent to 8,390 yen. (Reporting by Elaine Lies; Editing by Edwina Gibbs)