* Nikkei clings near 10-month high, eyes 10,800 target * Light profit-taking hits exporters as yen edges higher
* No damage from quake, construction shares gain
By Elaine Lies
TOKYO, Aug 11 (Reuters) - Japan's Nikkei stock average edged up 0.3 percent on Tuesday towards a 10-month high, with construction stocks like Obayashi Corp gaining in the wake of an earthquake and a storm that triggered mudslides.
Nippon Sheet Glass, a major glass maker, surged on a positive brokerage report but exporters slipped as the yen advanced against the dollar.
Analysts said that while the market was vulnerable to profit-taking after its recent gains, bargain hunting on dips would keep the downside supported and its recent upward trend was unchanged.
"The U.S. jobs figures have improved the consensus now so that more people are getting a sense the economy may have bottomed out, so the trend is upwards," said Hiroaki Osakabe, a fund manager at Chibagin Asset Manager.
"But U.S. consumption still hasn't recovered, so there may very well be some downward adjustments, and any rise by the Nikkei to 12,000 is likely to take several months and require real proof of recovery in the larger economy."
In figures announced on Friday, the U.S. unemployment rate fell in July for the first time in 15 months as employers cut far fewer jobs than expected and that lifted Wall Street on Friday.
U.S. stocks fell on Monday as investors took profits after a four-week rally that took the broad S&P 500 index to a 10-month high on Friday, with the dollar's slip of 0.3 percent against the yen to 96.81 yen adding more pressure to Tokyo shares.
But buying by foreign investors, primarily of futures but also in the cash market, is helping to keep the Nikkei surprisingly resilient, said Kenichi Hirano, operating officer at Tachibana Securities.
The benchmark Nikkei gained 20.67 points to 10,554.93, heading up towards a 10-month high of 10,585.37 hit on Monday, while the broader Topix rose 0.1 percent to 970.39. The Nikkei's next target is likely to be 10,800 -- a 50 percent Fibonacci retracement from its June 2008 high and last October's 26-year low just under 7,000 -- followed by 11,000, roughly the level from which it fell rapidly after Lehman Brothers failed last September.
UNSHAKEN
Major manufacturers including Suzuki Motor, Yamaha Motor, Panasonic, Sony and Fujitsu Ltd said they had not seen damage to their factories in the area of a quake on Tuesday morning, which was centred southwest of Tokyo.
But construction shares gained, although Hirano at Tachibana said the sector had been unpopular in the recent rally and also needed to play catch-up.
Another analyst said recent floods and heavy rains had also helped boost the sector.
Obayashi Corp rose 4.7 percent to 443 yen, Shimizu Corp rose 2.3 percent to 397 yen and Taisei Corp gained 1.8 percent to 221 yen.
The construction subindex rose 1.6 percent, becoming the second-biggest gainer among the subindexes.
The biggest gainer at 2.3 percent was the insurance sub-index, with shares such as non-life insurer Aioi Insurance rising 3.5 percent to 474 yen after booking a large jump in quarterly profit.
Daiichi Sankyo, Japan's third-largest drug company, extended gains to climb 4.2 percent to 1,894 yen after it and Australian biotech firm Biota said on Monday that a new flu drug candidate has succeeded in late-stage trials in Asia.
Nippon Sheet Glass surged 8.6 percent to 353 yen after Bank of America Merrill Lynch initiated coverage with a "buy" rating, citing expectations of a significant earnings contribution from price hikes on European construction-use glass.
But shares of exporters fell after the market hit a 10-month closing high the previous day, tracking a decline in U.S. stocks which also succumbed to profit-taking.
Honda Motor Co slipped 1.9 percent to 3,150 yen, while electronics components maker TDK Corp slid 3.1 percent to 5,340 yen and chip equipment maker Tokyo Electron Ltd gave up 1.3 percent to 5,140 yen.
Trade slipped on the Tokyo exchange's first section, with 867 million shares changing hands, compared with last week's morning average of 962 million.
Advancing shares outnumbered declining ones 885 to 600. (Reporting by Elaine Lies; Editing by Edwina Gibbs)