* Nikkei may end nearly flat again - analyst
* BOJ's REIT buying helps real estate sector
* Square Enix plummets after outlook cut
By Ayai Tomisawa
TOKYO, Dec 17 (Reuters) - Japan's Nikkei inched down 0.1 percent on Friday as losses in trading houses like Mitsui & Co offset gains in financials and real estate stocks, while investors remained cautious over the market's recent rapid pace of gains.
The Nikkei had rallied about 12 percent since early November but ran out of gas and traded flat the past four days, and traders said the market needs new incentives to break out of the tight 190-point band it has been stuck in for over a week.
"They don't want to take large positions before the weekend, so the Nikkei may end nearly flat today," said Yutaka Miura, a senior technical analyst at Mizuho Securities.
Still, analysts say that because Japanese stocks have been underperforming overseas markets, the Nikkei will likely gain further towards the year-end and may target as high as 10,500.
The Nikkei was down 10.43 points at 10,300.86 by the midday break. The broader Topix index also lost 0.1 percent, to 903.30.
Banking stocks rose, with Mitsubishi UFJ Financial Group gaining 1.2 percent to 440 yen and Mizuho Financial Gorup adding 1.3 percent to 152 yen. The sector's price-to-book ratio is around 0.7, underperforming the average PBR of 1.2 for the Nikkei components.
Real estate-related shares climbed after the Bank of Japan's first purchase on Thursday of real estate investment trusts, part of its asset-buying scheme launched in October that aims to push down risk premium and corporate borrowing costs.
Sekisui House, Japan's largest home builder, rose 1.4 percent to 808 yen and Mitsubishi Estate gained 2 percent to 1,496 yen. Real estate was one of the best-performing sectors in the market.
Investors have been piling into the J-REIT market with the Tokyo Stock Exchange's REIT index having surged over 16 percent since the BOJ unveiled the asset buying plan in October.
Sharp Corp gained 2.9 percent to 852 yen after the Nikkei business daily said the electronics maker would spend about 100 billion yen to build production lines for small and midsize LCDs, with Apple Inc set to purchase the bulk of the output for its iPhone.
But Square Enix plummeted 10.3 percent to 1,435 yen after the videogame maker slashed its full-year net profit forecast by more than 90 percent to far below the market consensus and postponed the launch of two key game titles.
Mitsui & Co lost 2.8 percent to 1,304 yen on news that oil major BP was the biggest loser on Britain's blue-chip board on Thursday, as investors fretted that a U.S. government lawsuit might mean the cost of its oil spill will be far higher than predicted. Mitsui & Co owns a stake in the project. (Additional reporting by Antoni Slodkowski; Editing by Chris Gallagher)