* Exporters hit as dollar falls below 92 yen
* Dainippon Sumitomo up after news to bid for U.S. company
* Disappointing U.S. jobs data stokes economy worries
TOKYO, Sept 3 (Reuters) - Japan's Nikkei stock average lost 0.7 percent on Thursday as exporters fell on worries about the U.S. economy after disappointing jobs data, while Dainippon Sumitomo Pharma 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 Dainippon Sumitomo plans to offer about $2.7 billion to acquire U.S. drugmaker Sepracor.
A 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.
"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 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 and was down 0.2 percent at 92 yen, weighing on exporters.
"The pace of the yen's rise appears to be picking up," said Masayoshi Okamoto, head of dealing at Jujiya Securities.
"The market could go down to around 10,000 and hover above and below that level, but we're unlikely to see any huge plunges the way we did last September."
The benchmark Nikkei lost 76.52 points to 10,203.94 yen by midmorning, while the broader Topix fell 0.8 percent to 941.83 yen.
The Nikkei fell below its 25-day moving average 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.
Dainippon Sumitomo trimmed its gains slightly but was still up 5.4 percent at 1,068 yen. A takeover would bring Japan's No.7 drugmaker in terms of sales Sepracor's insomnia drug Lunesta and asthma drug Xopenex, as well as an experimental epilepsy drug and Sepracor's sales force of more than 1,000.
Exporters slid on the yen's strength. Investors fret about a stronger yen as it eats into exporter profits when repatriated.
Honda Motor Co lost 2.6 percent to 2,835 yen, Toyota Motor Corp slipped 1.5 percent to 3,850 yen and Canon Inc fell 1.1 percent to 3,460 yen.
Banks lost ground after their U.S. peers extended losses on Wednesday, with Mitsubishi UFJ Financial Group down 2.1 percent at 569 yen, Mizuho Financial Group losing 1.4 percent to 215 yen and Sumitomo Mitsui Financial Group down 1.3 percent at 3,850 yen. (Reporting by Elaine Lies; Editing by Chris Gallagher)