* Nikkei down 0.2 percent by midday
* Foreigners net buyers of Japan stocks 13th straight week
* Foreign buying pattern shows high hopes for U.S. economy
* Nikkei may rise to 10,800 in February -strategist
* Immediate resistance at 10,470 -analyst
By Antoni Slodkowski
TOKYO, Feb 3 (Reuters) - Japan's Nikkei average edged lower on Thursday, after posting its biggest jump in two months the day before, as worries over an escalation of violence in Egypt nudged investors towards safer assets, offsetting strong U.S. jobs data.
The Nikkei lacked clear direction after a lukewarm performance by Wall Street despite a report showing U.S. private-sector employers added more jobs than expected in January, amid signs the market is overbought while cautiously eyeing developments in Egypt..
Supporters of President Hosni Mubarak opened fire on protesters on the streets of Cairo, wounding seven, as a spike in violence helped to send oil prices above $100 a barrel.
"Traders are also reluctant to make big bets with heavyweights from industry, finance and electronics reporting today," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Morgan Stanley Securities.
This week marks the peak of Japan's corporate results reporting season for the October-December quarter, with such economic bellwethers as Sony Corp, Japan's biggest bank by assets Mitsubishi UFJ Financial Group, Sharp Corp and Hitachi Ltd reporting on Thursday.
Shares of Panasonic Corp fell 3.4 percent to 1,088 yen in heavy trade after it posted a worse-than-expected 5.6 percent fall in quarterly profit, as tough price competition and a stronger yen offset help from Japan's incentive scheme for eco-friendly appliances.
Panasonic's major rival, Sony, is expected to post a 15 percent fall in October-December profit on Thursday, also hurt by a stronger yen and tough price competition in the flat TV market.
By the midday break the benchmark Nikkei was down 0.2 percent or 24.58 points at 10,432.78.
The broader Topix also shed 0.2 percent to 927.65.
Morning volume decreased from a day earlier, with 920 million shares changing hands on the Tokyo Stock Exchange's first section. It was set to come in line with last week's closing average of 1.9 billion shares.
FOREIGNERS BUY
Foreign investors bought a net 54.2 billion yen ($663 million) of Japanese stocks last week, government data showed, marking the 13th consecutive week of buying.
Yamagishi of Mitsubishi UFJ Morgan Stanley said foreign investors appeared to be shifting into shares of major exporters as hopes mount for a pickup in the U.S. economy.
He predicted the Nikkei could rise to 10,800 this month, after major companies have posted earnings results, on hopes for a global recovery.
U.S. private employers added more jobs than expected in January, the 12th consecutive month that companies took on staff, adding to hopes that the U.S. labour market is slowly recovering and bolstering hopes for the more comprehensive U.S. jobs report on Friday.
"Market players see the January options settlement level at 10,470 as an immediate resistance level and while they wait for Friday's data, they are focusing on individual stocks of firms with strong earnings or recent news," said Masayuki Otani, chief market analyst at Securities Japan Inc.
Support for the Nikkei loomed around 10,422, the benchmark's 25-day moving average, a gauge often followed by Japanese traders.
Bucking the negative trend on the Nikkei was Fast Retailing, which jumped 4.0 percent to 12,740 yen and was the biggest percentage gainer among the Nikkei 225 components, after it said sales at its Japan stores rose for the first time in six months in January, boosted by strong demand for winter clothing.
Share prices of several trading houses rose a day after grain and oil markets hit pre-financial crisis highs on supply fears stoked by a harsh winter in major crop grower the United States and potential instability across the oil-rich Middle East.
Trading house Mitsui & Co rose 2.2 percent to 1,481 yen, while rival Sumitomo Corp gained 3.1 percent to 1,251 yen. ($1=81.72 Yen) (Additional reporting by Tokyo newsroom; Editing by Edmund Klamann)