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* REITs tumble on profit-taking after hitting 5-year high * Factory data offsets positive mood after S&P's record rise * Sentiment remains bright for new fiscal year - analysts * Panasonic falls on disappointment over no job cuts By Ayai Tomisawa TOKYO, March 29 (Reuters) - Japan's Nikkei share average ended Friday morning flat as worse-than-expected factory output data offset positive sentiment triggered by the U.S. S&P 500 hitting a record high, while trading was subdued on the last business day of the fiscal year. The Nikkei opened higher and swung into negative territory before ending the morning session where it began at 12,331.44, 0.8 percent below its 5-day moving average of 12,435.85. Japan's industrial production unexpectedly fell 0.1 percent in February from the previous month, government data showed, compared with a median market forecast for a 2.6 percent rise. The Topix dropped 0.6 percent to 1,030.56. "The data is hurting sentiment, although the impact should be limited and it may not last long," said Yutaka Miura, a senior technical analyst at Mizuho Securities. He added that despite poor factory data, production is seen recovering in the future amid a pick-up in corporate investment. Analysts said trading could be uneven while major foreign markets were closed for Good Friday, but sentiment would brighten next week with the April 1 start of the new fiscal year. Worries about the European debt crisis receded as banks in Cyprus reopened to relative calm on Thursday following the country's controversial bailout that taxed large depositors. In Wall Street, the S&P 500 set a record closing high. "Investors' risk-off stance has receded," said Yoshiyuki Kondo, an analyst at Daiwa Securities, but he added that investors may not build large positions before the weekend and on the last trading day. Nikon Corp gained 1.5 percent and Toyota Motor Co added 0.2 percent. However, Panasonic Corp fell 7.2 percent after the consumer electronics maker disappointed some investors by not announcing job cuts in its medium-term business blueprint. The Bank Of Japan's quarterly tankan survey of corporate sentiment is due out on Monday, while the central bank's first policy meeting under its new leadership will be held April 3-4. BOJ Governor Haruhiko Kuroda said on Thursday that the central bank would consider buying longer-dated Japanese government bonds and other risk assets, and would continue monetary easing until its 2 percent inflation target is achieved. REITs TUMBLE ON PROFIT-TAKING The Nikkei has gained about 20 percent this year on Prime Minister Shinzo Abe's push for bolder monetary and expansionary policies to beat deflation and bolster growth. Asset-related shares such as real estate companies, REITs and warehouse stocks, which have high asset values, have led the gains. Analysts said institutional investors were sellers on Friday, taking profits on recent gainers especially REITs and real estate stocks. "REITs are popular investment funds which are expected to rise further, so they will likely invest in them again after the new fiscal year starts," said Hajime Nakajima, deputy general manager at Cosmo Securities. The REIT index, which rose to a five-year high on Thursday, fell 1.8 percent. Nippon Prologis REIT Inc shed 5.1 percent, Comforia Residential REIT Inc tumbled 6.7 percent and Nippon Accommodations Fund Inc dropped 2.5 percent. In the real estate sector, Mitsui Fudosan Co fell 1.1 percent and Mitsubishi Estate Co dropped 1.6 percent.