* Investor attention on U.S. fiscal cliff * Investors stay on sidelines before U.S. result * Nissan surges on hopes for growth in North America By Ayai Tomisawa TOKYO, Nov 7 (Reuters) - Japan's Nikkei share average edged down on Wednesday despite gains in U.S. stocks as earlier short-covering ran its course while investors awaited the outcome of the U.S. presidential election. Traders said that in early trade, investors covered their short positions from early this week encouraged by a rise in U.S. stocks as investors looked forward to definitive U.S. election results. They added that the market was looking forward to a U.S. leader who can act decisively to avert the legislated "fiscal cliff" of spending cuts and tax hikes. By the midday break, the Nikkei was down 0.1 percent at 8,965.17 after rising to as high as 9,032.32 in early trade. The broader Topix was flat at 745.11. Democrat President Barack Obama and Republican challenger Mitt Romney are in a tight race as vote counts started in a few states. Obama and Romney have been neck-and-neck since their first debate in early October.. "Now the market's attention is how the new U.S. leader will deal with its fiscal policy," said Kenji Shiomura, a markets analyst at Daiwa Securities, adding that the so-called fiscal cliff is the biggest short-term threat to the global economy, including the direction of Japanese stocks. Unless a fractious Congress can move swiftly to reach a deal after the U.S. elections on Tuesday, about $600 billion in government spending cuts and higher taxes are set to kick in from Jan. 1 and could push the U.S. economy back into recession. "If the United States fails to resolve the fiscal cliff it would hit the U.S. economy hard as well as the world and the Japanese economy, so each G20 country will urge the United States to firmly deal with it," Bank of Japan Governor Masaaki Shirakawa said before a meeting of Group of 20 finance ministers and central bankers. Analysts added that once the market prices in the U.S. election result, the market will also likely move past the impact from sour Japanese corporate earnings. "Investors will likely continue seeing a correlation between the dollar-yen move and Japanese stocks as usual. In that sense, U.S. fiscal policy, which determines the direction of the dollar, is very important," said Hiroichi Nishi, general manager at Nikko Cordial Securities. Sumitomo Metal Mining Co Ltd climbed 5.8 percent to 1,087 yen, a one-month high, after the non-ferrous metal company cut its full-year operating profit forecast to 73 billion yen, slightly ahead of the market consensus of 72 billion yen. J.P. Morgan raised its price target on Sumitomo Metal Mining to 1,000 yen from 900 yen and kept its 'neutral' rating. Nissan Motor Co surged 4.0 percent to 704 yen on expectations of strong growth in sales in North America despite cutting its full-year operating profit forecast below market expectations. Nomura Securities lifted its price target on the automaker to 880 yen from 830 yen and reiterated its 'buy' rating. DeNA Co Ltd climbed 2.2 percent to 2,650 yen, hitting its highest level in six weeks after the social gaming company's first-half operating profit beat its own guidance. The benchmark Nikkei is up 6.0 percent this year, trailing a 13.6 percent rise in the U.S. S&P 500 and a 12.4 percent gain in the pan-European STOXX Europe 600 index.