* Tops sheds 1.4 pct to trade below 1,000 * Exporters suffer after weak U.S. factory data * Real estate firms gain ahead of BOJ meeting this week By Dominic Lau TOKYO, April 2 (Reuters) - Japan's Nikkei stock average dropped 1.8 percent to below the 12,000-mark for the first time in three weeks, with exporters like Canon taking a beating after weak U.S. factory data raised concerns about the recovery of the world's biggest economy. The Nikkei was down 213.87 points at 11,921.15 in midmorning trade, breaking below its 25-day moving average of 12,126.59 and extending the previous session's 2.1 percent decline. "People have plenty of profits to take. There are very few shorts out there in the market, so it ... creates a rather nasty fall," a senior dealer at a foreign bank said. The benchmark Nikkei rallied 19.3 percent in January-March, its best quarterly performance in nearly four years, after Prime Minister Shinzo Abe embarked on expansionary fiscal and monetary policies to revive the economy. The Bank of Japan is expected to announce further monetary easing steps after it concludes a two-day meeting on April 4. "You have got people, who have been away for Easter, come back to start selling. We are sellers here today but not enormously. People are taking profit, frightened by the yen," the senior dealer said. The yen rose to a one-month high of 92.96 to the dollar on Tuesday, rebounding from a 3-1/2-year low of 96.71 yen touched on March 12, after U.S. factory activity grew at the slowest pace in three months in March. The weak Institute for Supply Management data suggested the U.S. economy was losing some momentum at the end of the first quarter as the effects of a tighter fiscal policy kicked in. Exporters, which have rallied in recent months on the back of the yen's weakness, bore the brunt of the selling on Tuesday. Canon Inc, Toyota Motor Corp, Honda Motor Co, TDK Corp and semiconductor equipment maker Tokyo Electron lost between 1.6 and 3.8 percent. "The first-quarter performance was quite good, so investors want to take profit ... I am not worried about it too much," said Hisao Matsuura, an equity strategist at Nomura Securities. "I think the Nikkei can go down another 2 to 3 percent from here." He said he expected the Nikkei to test 13,000 by the end of June as the economy was likely to improve while the BOJ would keep its stimulus tap open. The broader Topix index shed 1.4 percent to 986.04, falling below the 1,000-mark for the first time in nearly four weeks. The Topix sank 3.3 percent on Monday, its biggest one-day percentage fall in two years. Engineering firm JGC Corp was a rare gainer, jumping 6 percent, after a consortium of France's Technip and JGC won a tender to build a liquefied natural gas plant on Russia's Yamal peninsula. Real estate and financial companies, which benefit from the government's drive to reflate the economy, also fared well. Mitsubishi UFJ Financial Group rose 0.2 percent and property firm Mitsui Fudosan added 3 percent.