* Toyota falls after weak U.S. auto sales in April * Sharp gains on report of potential $1 bln credit line * Investors lock in profits ahead of key events, long holidays By Tomo Uetake TOKYO, May 2 (Reuters) - Japan's Nikkei stock average headed for a fourth straight session of losses on Thursday after weak U.S. data heightened worries about the recovery in the world's largest economy. A fourth day of declines would mark the longest losing streak since November, just before Prime Minister Shinzo Abe began promising expansionary monetary and fiscal policies to spur growth during his election campaign. The Nikkei fell 0.5 percent to 13,729.22 points by the midday break. Japanese financial markets will be closed on Friday and Monday for public holidays, and reopen on Tuesday. "Many investors are reluctant to take positions ahead of a long holiday weekend and key events abroad," said Masayuki Doshida, senior market analyst at Rakuten Securities. The European Central Bank will hold a rate policy meeting later on Thursday, while the closely watched U.S. nonfarm-payroll report for April is due out on Friday. "But buying interest in Japan stocks remains strong, helping to limit the Nikkei's downside as well as to prompt a rally in the smaller-caps," Doshida said. The Mothers index, made up of small to mid-sized companies and emerging stocks, inched up 0.1 percent to 856.36, still hovering around its 5-1/2-year closing high of 874.79 hit on Tuesday. The latest U.S. data showed that companies had hired the fewest employees in seven months in April, boding ill for the key nonfarm payrolls data due out on Friday, and that manufacturing growth had slowed to a crawl. Investors have also been pocketing gains after the Nikkei - which rose to a near five-year high last week - failed to breach technical resistance at 13,988, the 61.8 percent retracement of its slide from February 2007 to October 2008. The broader Topix index edged down 0.3 percent to 1,155.38, with volume at 40 percent of its full daily average of the past 90 trading days. "We are seeing some selling out of the yen-name automotives on the back of U.S. auto sales, which were weaker than expected," a senior dealer at a foreign brokerage said. Toyota Motor Corp lost 1.4 percent and was the sixth most-traded stock on the main board by turnover after data showed its U.S. light vehicle sales fell 1.1 percent year-on-year last month. Toyota shares are still up nearly 80 percent since mid-November. During the same period, the yen has weakened 20 percent and the benchmark Nikkei has rallied almost 60 percent. Daiwa Securities Group, Japan's second-largest brokerage, shed 1.8 percent even after the firm posted its highest quarterly profit in seven years on Wednesday. The stock had rallied 31.6 percent in April, its best monthly performance since November 1998. Of the 61 Nikkei companies that have reported quarterly results so far, 52 percent of them either beat or met market expectations, according to Thomson Reuters StarMine. That compared with 62 percent missed in the previous quarter. Sharp Corp and Takeda Pharmaceutical Co Ltd bucked the market fall. Sharp climbed 4.7 percent after the Nikkei newspaper said Mizuho Corporate bank and Bank of Tokyo-Mitsubishi UFJ were considering a roughly 100 billion yen ($1 billion) credit facility to help the struggling consumer electronics maker meet an upcoming bond redemption. Takeda advanced 2.3 percent after the drugmaker said a U.S. court had nullified a $6.5 million jury verdict over its Actos diabetes drug.