(In Jan 11 report, corrects company name in paragraph 6 to ... JPMorgan ... instead of ... Morgan Stanley, and deletes reference to Advanced Micro Devices Inc)
* Nikkei average falls 0.3 percent, retreats from 8-mth high
* Euro zone worries weigh on sentiment
* Japan plan to buy euro zone bonds has limited impact
* U.S. earnings to be eyed for clues on economic growth
By Ayai Tomisawa and Antoni Slodkowski
TOKYO, Jan 11 (Reuters) - The Nikkei average edged lower on Tuesday, backing away from an eight-month high hit at the end of last week, as worries over the euro zone's debt problems prompted some investors to lock in profits on recent gainers.
Japan's announcement that it planned to buy euro zone bonds to support the European financial system boosted the euro against the yen, which briefly lifted shares of exporters but had a limited impact on the overall market.
"There is still uncertainty over the European economy, so investors are cautious especially after the Tokyo market's recent sharp gains," said Yumi Nishimura, senior market analyst at Daiwa Securities Capital Markets.
The benchmark Nikkei closed down 0.3 percent or 30.36 points at 10,510.68, after hitting an eight-month closing high on Friday. Tokyo markets were closed on Monday for a public holiday.
Falls were limited as many traders said they were already concentrating on this week's earnings announcements from U.S. companies, looking for further signs that the world's No.1 economy is picking up steam.
JPMorgan Chase & Co and Intel Corp are among companies reporting earnings this week.
The broader Topix index was up 0.1 percent at 926.94.
"Buying of defensive stocks may support the market this week, so despite worries in the euro zone, the market may not see a lot of losses," said Tsuyoshi Segawa, an equity strategist at Mizuho Securities, adding that the Nikkei may stay in a range of 10,400 to 10,600.
The euro rose against the yen after Finance Minister Yoshihiko Noda said Japan would buy about 20 percent of bonds the euro zone plans to jointly issue later this month to raise funds to support Ireland.
Market players played down the impact of the announcement, however, noting that euro zone debt worries, the main reason investors sold stocks on Tuesday, were persistent and likely to keep resurfacing.
EURO ZONE WORRIES
"It's a small positive factor as it helps weaken the yen against the euro and support exporters, but it won't change the mood of the market overall as the euro zone worries aren't going away," said Hideyuki Ishiguro, a supervisor in the investment strategy section at Okasan Securities.
The euro-sensitive precision machinery sector lost 0.7 percent and exporters with high exposure to Europe were among the biggest underperformers on the Nikkei, with Canon Inc dropping 1.4 percent to 4,155 yen and Olympus Corp falling 1.1 percent to 2,519 yen.
A senior euro zone source told Reuters on Sunday there was growing pressure on Portugal from Germany and France to seek financial help from the European Union and the International Monetary Fund to prevent the debt crisis from spreading. Germany denied the report.
Elpida Memory fell 3.8 percent to 1,001 yen after the Nikkei business daily on Saturday said that sharply declining DRAM chip prices are severely hitting suppliers' earnings, with Elpida likely suffering its first group operating loss in six quarters in the October-December period.
The world's third-biggest DRAM maker appears to have ended the quarter with an operating loss exceeding 20 billion yen, compared with a profit of 30.5 billion yen a year earlier, the daily said.
Resona Holdings slipped 7.3 percent to 485 yen after it said on Friday that it would go ahead with a share offering to raise about $8 billion, taking advantage of the recently buoyant stock market to make progress on its repayment of government bailout funds.
Nippon Steel Corp rose 3.8 percent to 303 yen and JFE Holdings Inc added 2.5 percent to 2,907 after Credit Suisse hiked the iron and steel sector to "overweight" from "marketweight", citing recovering demand in China.
Aeon Co Ltd, Japan's second-largest retailer, was up 2.9 percent at 1,051 yen after posting a 52 percent surge in quarterly operating profit and keeping its annual outlook unchanged.
Volume was steady, with around 2.1 billion shares changing hands on the Tokyo Stock Exchange's first section, slightly above last week's daily average of 2.0 billion.
Advancing issues outnumbered decliners by 1,069 to 462. ($1=82.69 Yen) (Editing by Edmund Klamann)