REFILE-Nikkei down 0.5 pct; N.Korea, futures selling weighs

(Adds dropped letter to word 'weighs' in headline)

* Response measured but Nikkei still hurt by N.Korea news

* 200-day moving average at 9,400 marks resistance

* Japan retail investor sentiment best since Sept 2007

By Shinichi Saoshiro

TOKYO, May 26 (Reuters) - Japan's Nikkei average fell 0.5 percent on Tuesday, pulled lower after North Korea warned of further short-range missile tests and weighed down by selling in the futures market.

The Nikkei was hit by tech shares such as TDK Corp (6762.T), though slides were checked by rises in shares such as drugmakers and telecoms firms.

Some analysts said the Nikkei was retreating after a failed attempt on Monday to make a sustained break above resistance at 9,400, about the same as its 200-day moving average. The Nikkei rose briefly to 9,402.76 on Monday. Nitori Co (9843.T), a furniture and interior store chain, surged after UBS raised its target price and predicted a strong rise in profit.

Trade was thin, with a number of investors waiting to see how Wall Street will reopen after the U.S. Memorial Day holiday.

"The market lacked decisive incentives as Wall Street was closed on Monday. In addition to the North Korea missile news, selling of futures by CTAs led the market lower," said Kazuki Miyazawa, a market analyst at Daiwa Securities SMBC.

"They sold stock futures and bought bond futures after doing the opposite the previous day."

Commodity trading advisers, or CTAs, are trend-following funds that use programmes and software to trade financial markets.

On Tuesday, Yonhap news agency quoted a South Korean official as saying that North Korea is ready to fire another short-range missile either on Tuesday or Wednesday, a day after testing a nuclear device and firing three short-range missiles. [ID:nSEO203830].

The Nikkei gained 1.3 percent on Monday after shrugging off North Korea's actions. Though the response to the latest report on North Korea was a measured one, warnings of further missile tests still weighed on the market.

"This isn't necessarily going to have much of an impact -- after all, the market shrugged off the nuclear test yesterday -- but it's also not particularly encouraging either," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.

Investors, meanwhile, were waiting for cues from U.S. economic indicators due out later this week and the fate of struggling carmaker General Motors GM.N.