Nikkei slips 0.9 pct after BOJ rate cut, Toyota hit

* Nikkei falls 0.9 pct, gains 4.3 pct on the week

* BOJ cuts benchmark rates to 0.10 pct from 0.30 pct

* Toyota slips after report to post operating loss

* Daiichi Sankyo jumps after Europe backs key product

By Rika Otsuka

TOKYO, Dec 19 (Reuters) - The Nikkei average slipped 0.9 percent on Friday as profit-taking before the weekend overshadowed a Bank of Japan rate cut, with Toyota Motor (7203.T) retreating after a newspaper said it would post an annual operating loss.

Oil-related shares such as Inpex Corp (1605.T) slid after U.S. crude prices dropped sharply, but drugmaker Daiichi Sankyo Co Ltd (4568.T) jumped after European regulators backed a key drug candidate for approval.

The Nikkei briefly turned positive after the BOJ lowered its key policy rate to 0.10 percent from 0.30 percent and took other steps to ease corporate credit strains, as sharp yen rises and crumbling global demand hit an economy already in recession. [ID:nT108858]

But the market soon ran out of steam as investors booked profits on shares that had risen on expectations for a BOJ cut, ahead of the weekend and the winter holiday season.

"The market was hit by selling on a rally as the outcome of the BOJ meeting was as expected and trading factors are exhausted for now," said Kazuhiro Takahashi, general manager at Daiwa Securities SMBC.

The Nikkei .N225 shed 78.71 points to 8,588.52, after rising as high as 8,743.22. The benchmark index gained 4.3 percent on the week.

The broader Topix slid 0.5 percent to 834.43.

Toyota shed 2 percent to 2,900 yen after the Nikkei financial daily said the world's biggest automaker was likely to report its first-ever operating loss for the year ending March 31 due to plunging sales and the yen's strength. [ID:nT289117]

Other media reported that Toyota may manage to post an operating profit on a consolidated basis, though it would likely book a loss on a parent-only basis.

Among energy-linked shares, Showa Shell Sekiyu (5002.T) slid 0.5 percent to 849 yen and Nippon Oil Corp (5001.T) lost 4.6 percent to 398 yen. Inpex plunged 5.9 percent to 586,000 yen.

Daiichi Sankyo (4568.T) jumped 5.9 percent to 2,025 yen after the blood clot preventer prasugrel, developed by Daiichi and Eli Lilly & Co, won a major endorsement from international regulators on Thursday when the European Medicines Agency recommended its approval. [ID:nLI291578]

Trade was light on the Tokyo exchange's first section, with 1.9 billion shares changing hands, compared with last week's daily average of 2.3 billion.

Declining stocks outnumbered advancing ones by nearly 3 to 1. (Reporting by Rika Otsuka and Aiko Hayashi; Editing by Chris Gallagher)