Nikkei dips, logs first weekly fall in a month

* Nikkei dips 0.5 pct, logs first weekly fall in a month

* Drug wholesaler Alfresa tumbles after scrapped merger

* Investors wary ahead of US jobs data, Japan 3-day weekend (Adds stocks, details)

By Aiko Hayashi

TOKYO, Jan 9 (Reuters) - The Nikkei average slipped 0.5 percent on Friday as exporters lost steam after a recent rally and rekindled worry about the global economy weighed, though trade was cautious throughout the day ahead of key U.S. jobs data.

The benchmark, which had climbed nearly 9 percent in a recent rally on hopes for economic steps by the incoming U.S. administration, booked its first weekly decline in a month.

Alfresa Holdings (2784.T) tumbled more than 11 percent after it and fellow drug wholesaler Mediceo Paltac Holdings (7459.T) scrapped merger plans after the nation's fair trade watchdog asked them to review the plans. [ID:nTKF003250]

But Fast Retailing (9983.T) bucked the market trend and gained more than 3 percent. After the bell, it reported a jump in first-quarter profit and lifted its annual forecast, citing robust sales at its Uniqlo discount clothing stores. [ID:nT291551]

Investors were reluctant to actively take positions ahead of U.S. jobs data due later in the day and before a three-day weekend in Japan, market analysts said. Japanese markets will be closed on Monday for a national holiday.

"Today's fall doesn't mean that the market has switched to a downward trend," said Masaru Hamasaki, a senior strategist at Toyota Asset Management.

"It's simply that investors rushed to take profits after jobs data out a couple of days ago renewed worries about the economy and the market had gained quit a bit around the new year."

In seesaw trade, the Nikkei shed 39.62 points to 8,836.80. For the week, it dipped 0.3 percent. The last weekly fall was recorded in the week of Dec. 1 with a 7 percent drop.

The broader Topix fell 0.7 percent to 855.02.

Recession fears were heightened after ADP, a private employment service, said U.S. private employers shed far more jobs than economists estimated. [ID:nN07470568]

Bleak U.S. holiday retail sales figures from Wal-Mart stores Inc (WMT.N) and other retailers also sparked fresh recession concerns.

"Hopes for the government of (U.S. President-elect) Barack Obama remain strong, but the economy is rapidly worsening, and we have no choice but to face up to this," said Takahiko Murai, general manager of equities at Nozomi Securities.

FANUC DROPS, FAST RETAILING STRONG

Alfresa shares plunged 11.1 percent to 3,590 yen, while Mediceo added 1.6 percent to 1,020 yen.

Alfresa, whose shares had been scheduled to be delisted from exchanges because of the merger, will now keep it shares listed on the Tokyo and Osaka bourses.

Panasonic Corp (6752.T) fell 1.3 percent to 1,204 yen after a newspaper report that the electronics maker will cut its investment in two new flat-screen TV plants amid slumping demand. [ID:nT91016]

Industrial robot maker Fanuc (6954.T) and Dentsu (4324.T), Japan's largest advertising firm, both tumbled after brokerage downgrades.

Fanuc lost 7 percent to 6,250 yen, the top drag on the Nikkei 225, while Dentsu dropped 5.2 percent to 1,664 yen.

Other exporters also fell, with Honda Motor Co (7267.T) sliding 3 percent to 2,080 yen and Canon Inc (7751.T) shedding 1.3 percent to 3,130 yen.

But Fast Retailing climbed 3.5 percent to 12,670 yen, the biggest positive contributor to the Nikkei 225.

TDK Corp (6762.T) shares regained ground to add 2 percent to 3,570 yen after falling on news about its expected record loss and job cuts. [ID:nT360458]

Shipping firms gained after a key freight index .BADI rose for the third straight day, with Mitsui O.S.K. Lines (9104.T) rising 3.5 percent to 593 yen.

Defensive stocks benefited in the face of the global economic downturn. Kao, Japan's largest toiletry goods maker, jumped 3.1 percent to 2,630 yen. Trade was light on the Tokyo exchange's first section, with 1.9 billion shares changing hands, compared with 2.1 billion shares on Thursday.

Declining stocks beat advancing ones by nearly 2 to 1. (Editing by Hugh Lawson)