Nikkei flat ahead of U.S. jobs data but Hitachi up

* Investors cautious ahead of U.S. data

* But upbeat mood intact

* Hitachi jumps on report of lithium ion batteries

By Aiko Hayashi

TOKYO, July 2 (Reuters) - Japan's Nikkei average was flat on on Thursday as caution set in ahead of U.S. jobs data, but Hitachi Ltd (6501.T) jumped on a report that it will boost production of lithium ion batteries for hybrid cars.

Market analysts said the Nikkei is due for a pause after recovering some 40 percent from its March lows, though the overall mood remained upbeat, reinforced by reassuring manufacturing data from Europe, China and the United States.

"The market is at a standstill right now after overshooting recently and as it just under 10,000. It will likely spend July and August -- the summer months when trade is thin -- consolidating around the 10,000 level," said Fumiyuki Nakanishi, manager at SMBC Friend Securities.

The benchmark Nikkei .N225 was unchanged at 9,940.12. On Wednesday, it briefly touched its highest in about two weeks above 10,000, before ending the day slightly lower.

The broader Topix was also flat, at 929.12.

"The overly optimistic view on the economy has been modified and that is prompting investors to adjust positions in blue-chip stocks. For further gains, the market needs to see more improvement in the fundamentals of the economy," said Takahiko Murai, general manager of equities at Nozomi Securities.

"Still, environment-related stocks such as battery makers are faring pretty well as they are the flavour of the month."

The U.S. employment report, which is due on Thursday as U.S. markets will be shut on Friday for the Independence Day holiday, is expected to depict an economy still wallowing in recession but it will likely confirm the pace of job loss has slowed. [ID:nN01511504]

The Dow Jones industrial average .DJI rose 0.7 percent on Wednesday. Surveys from Europe showed manufacturing was shrinking less than initially thought and in China's case, growing modestly, while other data showed the U.S. manufacturing sector contracted in June but at a slower pace than in May. [ID:nPEK138883] [ID:nN01366244]

HITACHI SHINES

Hitachi shares climbed 4.4 percent to 311 yen after the Nikkei business daily reported the company plans to boost production capacity for lithium ion batteries for hybrid cars, targeting a 70-fold increase by 2015. [ID:nBNG508790]

Pacific Metals (5541.T), Japan's largest maker of ferro nickel, surged 5.6 percent to 772 yen after nickel prices jumped more than 5 percent and hit a nine-month high on Wednesday. [ID:nL1684431]