* Exporters hit as dollar briefly falls below 92 yen
* Dainippon Sumitomo up after news to bid for U.S. company
* Disappointing U.S. jobs data stokes economy worries
By Elaine Lies
TOKYO, Sept 3 (Reuters) - Japan's Nikkei stock average lost 0.4 percent on Thursday as exporters fell on worries about the U.S. economy after dismal jobs data, while Dainippon Sumitomo Pharma <4506.T> rose on news it would bid for a U.S. drug firm.
Dainippon Sumitomo opened up by nearly 8 percent after a
source with knowledge of the situation said the firm plans to
offer about $2.7 billion to acquire U.S. drugmaker Sepracor
The dollar briefly dropped below 92.00 yen for the first time
since mid-July as investors continued to trim dollar holdings
after the jobs report, putting additional pressure on exporters,
but recovered slightly and was flat at 92.16 yen
"We're in a situation now where expectations outpaced reality over the last two months. This is just a natural adjustment, even though the economy is over the worst," said Hiroichi Nishi, general manager at the equity division of Nikko Cordial Securities.
The benchmark Nikkei <.N225> lost 41.78 points to 10,238.68 yen by midday, while the broader Topix <.TOPX> fell 0.6 percent to 944.23 yen.
A U.S. labour market report showing more private-sector job losses in August than forecast made investors nervous ahead of Friday's highly anticipated monthly jobs data from the U.S. Labor Department, sending Wall Street shares lower. [ID:nN02321193]
But market players were unfazed by the Nikkei's drop.
"Basically, there's no real reason for the market to fall substantially. Prices were high and people are simply selling to take profits, especially ahead of the U.S. Labor Day holiday on Monday," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.
The Nikkei fell below its 25-day moving average, which currently comes in at around 10,400, on Wednesday. But most market players see this as simply signalling a short-term adjustment and nothing major to worry about.
"As long as the line of the 25-day moving average on charts still points upwards, falling below it is actually a sign you should buy on dips," Nikko Cordial's Nishi added.
Others see support for the Nikkei ranging from around 10,000 to 10,200 over the next month, with none expecting steep falls.
GAINS AFTER DEAL
Dainippon Sumitomo trimmed its gains but was still up 3 percent at 1,043 yen.
Dainippon, Japan's No.7 drugmaker in terms of revenue, would under the takeover gain a sales force of about 1,000 that is familiar with central nervous disorders to promote its experimental schizophrenia drug, which has performed well in late-stage trials.
It would also gain Sepracor's insomnia drug Lunesta, asthma drug Xopenex, and an experimental epilepsy drug.
The purchase would be the latest in a series of acquisitions by Japanese drugmakers of U.S. rivals as they seek to beef up their drug pipelines and their presence in the world's largest pharmaceuticals market.
Exporters slid on the yen's strength. Investors fret about a stronger yen as it eats into exporter profits when repatriated.
"The pace of the yen's rise appears to be picking up," said Masayoshi Okamoto, head of dealing at Jujiya Securities.
Honda Motor Co <7267.T> lost 2.4 percent to 2,840 yen, Toyota Motor Corp <7203.T> slipped 1.5 percent to 3,860 yen and Canon Inc <7751.T> edged down 0.9 percent to 3,470 yen.
Banks lost ground after their U.S. peers extended losses on Wednesday, with Mitsubishi UFJ Financial Group <8306.T> down 2.2 percent at 567 yen, Mizuho Financial Group <8411.T> losing 1.4 percent to 215 yen and Sumitomo Mitsui Financial Group <8316.T> down 0.8 percent at 3,870 yen.
But slides were checked by gains in a broad range of defensive shares, which are seen to be resilient in the face of uncertain economic conditions, especially overseas.
Fast Retailing <9983.T>, operator of the Uniqlo casual clothing chain, rose 4.2 percent to 10,940 yen after the company said on Wednesday it aims to boost annual sales more than seven-fold to $54 billion by 2020 as it continues to seek acquisitions and overseas expansion to become a global fashion powerhouse. [ID:nT162154]
Trade fell off slightly, with 835 million shares changing hands on the Tokyo exchange's first section compared with last week's morning average of 908 million.
Declining shares outnumbered advancing ones by 2 to 1. (Reporting by Elaine Lies; Editing by Joseph Radford)