Japan's Nikkei falls 0.7 pct as investors cash out

(Updates to midmorning)

TOKYO, April 4 (Reuters) - Japan's Nikkei stock average fell 0.7 percent on Friday as investors locked in the market's three-day gain ahead of closely watched U.S. jobs data.

Exporters such as Honda Motor Co Ltd (7267.T: Quote, Profile, Research, Stock Buzz) and Toyota Motor Co (7203.T: Quote, Profile, Research, Stock Buzz) were among the top drags on the index.

"We are seeing profit-taking after the three-day winning streak and ahead of jobs data," said Harushige Kobayashi, head of the research department at Maruwa Securities.

The Nikkei had gained nearly 7 percent since Tuesday as fears of the credit crisis spinning out of control eased following a successful capital boost by Lehman Brothers (LEH.N: Quote, Profile, Research, Stock Buzz).

Still, many market participants said the gain was mostly due to unwinding of short positions and the market has not attracted a flow of new money to drive it up further.

"The outlook for the U.S. economy remains uncertain. It is said that it will recover in the second half, but I am not sure about that either," Kobayashi said.

The U.S. March employment report is due later in the day, with economists forecasting a cut of 60,000 jobs.

As of 0024 GMT, the benchmark Nikkei .N225 was down 99.32 points at 13,290.58. The broader TOPIX fell 0.5 percent to 1,293.51.