* Nikkei down 0.5 pct but stays above 25-day moving average * Steelmakers drop after report Toyota seeks price cut * Nomura bullish on Japan stocks in H1, eyes Nikkei above 10,000 By Dominic Lau and Mari Saito TOKYO, Jan 5 (Reuters) - Japan's Nikkei stock average pulled back on Thursday from a three-week closing high, weighed down by concerns that the euro zone debt crisis would keep the single currency weak against the yen and hurt Japanese exporters. "The strong yen against the euro is not seen as a temporary, short-term problem and it is pressuring the market," said Yutaka Miura, a senior technical analyst at Mizuho Securities. "The focus this year is whether Europe's debt problems will settle and when those problems will begin to impact the United States. There are no other themes this year except Europe. Market participants are watching how much longer the yen will continue to rise against the euro and the dollar." The euro was trading just above 99 yen on Thursday, near an 11-year low. Miura said that investors did not want to buy near the top after Wednesday's gains and that resistance on the Nikkei was seen just above its 25-day moving average at 8,600. Steelmakers came under pressure after a report in the Nikkei business daily that Toyota Motor Corp is seeking a price reduction of about 5,000 yen ($65.16) per tonne from Nippon Steel and its peers. Nippon Steel also announced after the morning session that it plans to book an 84.6 billion yen appraisal loss on its shareholdings for the October-December period. Nippon Steel fell 1.5 percent by the midday break and JFE Holdings shed 1.7 percent. Other actively traded stocks included struggling chipmaker Elpida Memory, which dropped 6.4 percent after a report that it has sought $500 million in financial aid from clients and is considering asking for help from Toshiba Corp. Elpida declined to comment. The Nikkei was down 0.5 percent at 8,514.03 at midday, holding just above its 25-day moving average of 8,504 after gaining 1.2 percent on Wednesday. The broader Topix slipped 0.5 percent to 739.24. Volume on the Topix was 36 percent of its 90-day daily average. Hiroyuki Fukunaga, CEO of Investrust, said U.S. employment data this week would be a crucial near-term factor. "The key point here will be whether the positive economic data will lead to market confidence over the U.S. economic recovery and whether there is any impact on the dollar," he said. NOMURA BULLISH ON NIKKEI However, Nomura expected Japanese equities to rebound in the first half of 2012, with the Nikkei going above 10,000, more than 17 percent above its current level. "In 2012 H1, we expect good news in the form of an easing of financial concerns in Europe and greater-than-expected strength of the global economy and emerging economies in particular, and we thus expect the Japanese stock market to be driven by trading companies, machinery, electronics/precision and financials," Nomura wrote in a note. Although the Topix 500 carries a similar 12-month forward price-to-earnings valuation of 11.7 to the U.S. S&P 500 , nearly 60 percent of the Japanese companies are trading below their net asset value, data from Thomson Reuters Datastream showed. That compares with 15 percent of the S&P 500 firms carrying a one-year forward price-to-book ratio of below 1.