* Nikkei hurt by profit-taking after 4 days of gains
* But index comes off session lows as upbeat mood intact
* Wall Street's reaction to Obama's economy plan eyed
* Nikkei holds above 25-day moving average
By Shinichi Saoshiro
TOKYO, Sept 7 (Reuters) - Japan's Nikkei stock average edged lower on Tuesday, dented by profit-taking after four straight days of large gains and as the yen's strength shows little sign of abating.
But the benchmark managed to hold above its 25-day moving average, a sign that it could resume climbing once profit-taking was absorbed.
"The Nikkei managed to bounce from session lows as the market continued to draw momentum from the upward push gained after encouraging U.S. jobs data last week, which helped curb extreme pessimism towards the economy," said Nagayuki Yamagishi, a strategist with Mitsubishi UFJ Morgan Stanley Securities.
The Nikkei has recovered about 5 percent this month following a 7.5 percent slide in August but remains one of the worst performing major world stock markets this year, hurt by worries about the impact of the yen's strength on corporate earnings and the fragile economic recovery.
It fell 21.52 points or 0.2 percent to 9,279.80, pulling back from a session low of 9,223.65.
The index is holding above its 25-day moving average, currently at around 9,210, which is considered a proxy for a one-month moving average and is closely watched in Japan, and at one stage, it briefly poked its head into positive territory.
The broader Topix was little changed at 838.73.
Market players are keen to see how Wall Street reacts to U.S. President Barack Obama's infrastructure plan proposal.
Scrambling to spur job creation, Obama proposed a six-year plan on Monday to rebuild U.S. infrastructure with an initial $50 billion investment and prepared new business tax cuts.
Investors were also keeping an eye on the Bank of Japan as it wraps up a two-day policy meeting. Many expect the central bank to keep monetary policy unchanged as it has already eased at an emergency meeting last week.
"The consensus is for the BOJ to stand pat on monetary policy as it has already eased last week. But focus is on the governor's press conference after the meeting and whether he mentions anything about the yen's strength," said Yamagishi at Mitsubishi UFJ Morgan Stanley Securities.
The dollar traded at 84.20 yen, within sight of a 15-year low of 83.58 yen hit on electronic trading platform EBS late last month.
If the Nikkei rises above 9,362, an intraday high hit on August 20, that would be a one-month high. After that, its next target is 9,460, where the bottom of its Ichimoku cloud lies.
Support lies at 9,049, its tenkan sen, an indicator of short-term trends. Ichimoku charts are popular with Japanese traders.
NIKKEI JOINERS JUMP
Shares of Tokyo Tatemono Co Ltd and Nippon Electric Glass Co Ltd climbed after the publisher of the Nikkei 225 said on Monday it would add the two stocks as new components of the index in the coming weeks.
Tokyo Tatemono jumped 3.6 percent to 320 yen and Nippon Electric Glass added 2.2 percent to 1,088 yen. Clarion Co Ltd, which will be removed on Oct. 1, lost 7.5 percent to 160 yen.
Shares of exporters lost ground after having led gains in the overall market the previous day.
Kyocera Corp fell 0.6 percent to 7,720 yen and Advantest Corp shed 0.4 percent to 1,680 yen. Honda Motor Co was down 0.4 percent at 2,845 yen.
U.S. markets were closed on Monday for the Labor Day holiday. (Additional reporting by Aiko Hayashi; Editing by Edwina Gibbs)