Japan stocks erase gains, waiting for FOMC

(Updates to mid-morning)

TOKYO, Dec 10 (Reuters) - Japanese stocks erased earlier gains on Monday as profit-taking kicked in, with shares boosted briefly by better-than-expected machinery orders data, while a weak yen helped support exporters such as Sony Corp (6758.T: Quote, Profile, Research, Stock Buzz).

Thin trade ahead of a raft of economic events and indicators, including Tuesday's decision by the U.S. Federal Reserve on an interest rate cut and Friday's tankan survey of Japanese corporate sentiment, was making activity volatile and vulnerable to selling at the highs.

Japan's core private-sector machinery orders, a key gauge of corporate capital spending, rose 12.7 percent in October from the previous month.

"This did briefly push stocks up, but the real focus of the market is now on the slightly longer term, such as what happens next year, and with fears that the economy may slow nobody will really bid the Nikkei up," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.

"Investors are staying on the sidelines ahead of the Fed meeting, but there's also a huge number of indicators both here and in the United States, so nobody's really willing to buy actively at this point."

Lacklustre sentiment carried over from New York, where stocks ended Friday trade little changed, with concerns about consumer spending balanced out by a sharp drop in oil prices and signs of resilience in the labour market.

The dollar's strength against the yen <JPY=> provided some support for Tokyo shares and briefly boosted exporters before later selling emerged. It stood around 111.66 yen by mid-morning in Tokyo.

At 0057 GMT the benchmark Nikkei .N225 was down by 0.6 percent, at 15,868.61, after opening at 16,007.33. The broader TOPIX index was down by 0.34 percent at 1,556.37.