Nikkei hits 7-mth high, edging back to overbought territory
* Nikkei up 0.3 pct; Topix dips 0.1 pct in active trade * Construction firms gain on hopes of infrastructure works * Advantest surges on report of strong orders this qtr By Dominic Lau TOKYO, Dec 10 (Reuters) - Japan's Nikkei share average hit a seven-month high on Monday, buoyed by a jump in Chinese November factory output and a better-than-expected U.S. jobs report, although profit-taking in some exporters capped gains. The Nikkei added 0.3 percent to 9,550.99 after trading as high as 9,584.46, its best level since late April. The gains almost took the benchmark back into "overbought" territory, with its 14-day relative strength index at 69.96. Seventy or above is deemed overbought, which often signals a possible short-term pull back. Growth in China's factory output and retail sales rose to eight-month highs in November, boosting Japanese firms with significant exposure to the world's second-largest economy. Construction machinery makers Komatsu Ltd and Hitachi Construction Machinery Co Ltd both advanced 0.7 percent. "You have some pretty decent comments coming out of the Chinese macro number, which is always going to be a driver for Japanese companies," a senior dealer at a foreign brokerage said. Adding to the positive sentiment, U.S. employers created 146,000 jobs last month, defying predictions that superstorm Sandy would deal a big blow to the labour market. But a steep drop in U.S. consumer confidence in December, the largest fall in more than 1-1/2 years, offered a cautionary note on the health of the world's largest economy. A 10.2-percent rally in the Nikkei over the past 3-1/2 weeks was showing some signs of fatigue, as investors took gains in some of the exporters, with Canon Inc, TDK Corp and Honda Motor Co down between 0.4 and 2.1 percent. During that period, the yen has weakened, boosting exporters, after Shinzo Abe, the leader of the main opposition which is expected to win a Dec. 16 general election, called for the Bank of Japan to embark on "unlimited easing" and set an inflation target of 2 percent. Stefan Worrall, director of equity cash sales at Credit Suisse in Tokyo, said some in the market were concerned that a lot of the positive outcome had been priced in to the market and it needed further positive news to push the index higher. "It's kind of tired and needs more fuel to continue to rally aggressively right through this week ahead of the election," he said. But Worrall remained upbeat. "The little phenomenon that we are seeing on the side is that China, which is such a negative concern until a week ago, is beginning to show some encouraging market rebound," he said. ADVANTEST, FAST RETAILING RISE Other notable gainers included Advantest Corp, up 5.5 percent after Bloomberg news quoted the chip tester maker's President Haruo Matsuno as saying that he expected new orders to rise 20 percent in the October-December quarter from the previous three months. Index heavyweight Fast Retailing Co Ltd put on 1.5 percent after Nomura Securities lifted its price target on the owner of Uniqlo casual clothing chain. The broader Topix dipped 0.1 percent to 789.41 in active trade, with volume at 68 percent of its full daily average for the past 90 trading days. Japanese equities carry a 12-month forward price-to-earnings ratio of 12.1, more expensive than the pan-European STOXX Europe 600's 11.1 but cheaper than the U.S. S&P 500's 12.5, data from Thomson Reuters Datastream showed. The benchmark Nikkei is up 13 percent this year, in line with a 12.8 percent rise in the S&P 500 but lagging a 14.2 percent gain in the STOXX Europe 600.