* Nikkei caught between strong China PMI, strong yen
* Recovery in China shares also a boost
* Trade light as market awaits U.S. ISM data
* Turnover volume at lowest since mid-July
By Elaine Lies
TOKYO, Sept 1 (Reuters) - Japan's Nikkei stock average drifted higher on Tuesday in choppy trade, helped by gains in Shanghai shares, although rises were limited by the yen's advance against the dollar and jitters ahead of U.S. economic data.
A rise in China's official purchasing managers' index (PMI) for August also provided support.
But trade was very thin, with investors wary amid uncertainty about how well Japan's newly elected Democrats will be able to govern and ahead of U.S. indicators, including the ISM manufacturing index later on Tuesday.
Turnover for the Tokyo exchange's first section fell to 1.2 trillion yen, its lowest since mid-July.
"Things are rather unclear right now -- we gained a bit after the China PMI but there's not enough strength to really push the Nikkei higher, especially given what's happening with the yen," said Takashi Ushio, head of the investment strategy division at Marusan Securities.
The benchmark Nikkei gained 0.4 percent or 37.53 points to 10,530.06 after dancing in and out of negative territory during morning trade, with futures leading activity.
The broader Topix rose 0.3 percent to 968.77
Analysts said the Nikkei, which has risen some 50 percent from its March lows, remains in an uptrend.
"The Nikkei overall remains fairly strong, but there's jitters about the yen and the market is vulnerable to bad news," said Tomomi Yamashita, fund manager at Shinkin Asset Management.
A bit of good news came from Shanghai, where shares rose 1.1 percent after tumbling nearly 7 percent on Monday.
The yen held near a seven-week peak on the dollar on Tuesday, trading at around 93 yen. Investors fret about a stronger yen because it eats into exporters' profits when they are repatriated.
Some market players said that they believed that the correlation between moves in currency markets and Tokyo stocks could grow stronger after Sunday's election victory for the Democrats as some party officials have said Japan should start thinking of a strong yen as in its interest.
Analysts said that so far, foreign investors -- long a driver of the Nikkei, and who had been predicted to welcome a change in government -- did not appear to be very active in the market. "While the sense of change is important to foreign investors, the fact is that some aspects of a Democratic government could be negative for manufacturers. So I'd say it's hard to imagine them buying much right now," said Hiroaki Osakabe, fund manager at Chibagin Asset Management.
Sunday's landslide victory for Yukio Hatoyama's opposition Democrats ends a half-century of almost unbroken rule by the Liberal Democratic Party in Japan and breaks a deadlock in parliament.
AUTOS EDGE HIGHER Automakers nudged higher after Japan car sales, excluding 660cc minivehicles, rose 2.3 percent in August from a year earlier, marking the first gain in 13 months.
Honda gained 1.2 percent to 2,970 yen, while Toyota Motor Corp rose 0.8 percent to 4,020 yen and Nissan Motor climbed 2.0 percent to 663 yen.
Komatsu Ltd rose 0.9 percent to 1,693 yen after a source familiar with the matter told Reuters that sales of hydraulic excavators in China jumped 60 percent in unit terms in August from a year earlier, helped by the country's $586 billion economic stimulus package.
Chip gear makers rose, with chip tester maker Advantest up 2.2 percent to 2,370 yen, Tokyo Electron climbing 1.2 percent to 5,120 yen, and Nikon, a key maker of steppers, rising 4.3 percent to 1,669 yen.
Yoshinoya Holdings Co, which runs a chain of beef-on-rice bowl shops, dropped 2.2 percent to 111,500 yen after the Nikkei business daily said the company's operating profit for the March-August period was likely to be flat against previous estimates for profit of 1.4 billion yen.
Trade was light, with 1.7 billion shares changing hands on the Tokyo exchange's first section compared to last week's daily average of 1.9 billion.
Advancing shares outnumbered declining ones, 880 to 636. (Editing by Edwina Gibbs)