Japanese stocks down after weak data, steel gains

(Updates to midsession)

By Elaine Lies

TOKYO, Sept 3 (Reuters) - Japanese stocks edged lower on Monday, weighted by data showing that companies reduced spending on plant and equipment more than expected and lingering concerns about the U.S. economy, but the downside was solid after official comments reassured Wall Street and led it higher on Friday.

Shares in Nippon Steel Corp. (5401.T: Quote, Profile, Research, Stock Buzz), the world's second-biggest steelmaker, rose after the Nikkei business daily reported it is likely to raise dividends for the fourth straight year on robust demand for high-grade steel, with other steel shares also advancing.

Japanese firms cut capital spending by 4.9 percent in April-June from a year earlier, in sharp contrast with a median forecast by economists for an 11.5 percent rise, which analysts said was one likely reason for the Nikkei's dip.

"There was definitely a bit of disappointment over the capital spending, which was lower than expected, and it's also hard to predict what's going to happen in the United States," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities Co. Ltd.

"The market has confirmed that the downside is solid and is unlikely to go through 16,000 in the near future, but the top is equally solid around 17,000 -- although if any positive direction emerges it'll try for this."

Widespread sales also emerged as investors moved to lock in profits from shares that gained strongly on Friday.

Virtually no impact was seen from the resignation of Agriculture Minister Takehiko Endo, although there could be a long-term negative impact if this keeps support low for the cabinet of Prime Minister Shinzo Abe and affects economic policy.