* Nikkei up 0.9 pct
* Nikkei eyes biggest 1-mth gain in nearly a year
* Dollar hits two-mth high against the yen, boosts exporters
* Gains limited by profit taking, uncertainties-market player
By Antoni Slodkowski
TOKYO, Nov 29 (Reuters) - Japan's Nikkei average advanced on Monday, clawing back toward a five-month high hit last week, as the yen softened against the dollar, but gains were capped by profit-taking and concerns over the euro zone and North Korea.
The Japanese currency
Market players said an 85 billion euro bailout of Ireland had calmed them for now, but in the long run they feared contagion would strike fellow strugglers Spain and Portugal.
"The dollar moving above 84 yen is the biggest supporting factor today," said Koichi Nosaka, a market analyst at Securities Japan, Inc.
The benchmark Nikkei <.N225> climbed 0.9 percent or 89.81 points higher to 10,129.50 by early afternoon. At one stage it rose as high as 10,149.94, within sight of a five-month high of 10,157.97 hit last week.
The broader Topix index <.TOPX> advanced 1 percent to 875.31.
But market players said Tokyo stocks will struggle to post further quick gains.
"There are too many economic and political uncertainties for the market to go much higher than this -- we don't know what North Korea will do next," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.
Caution ahead of eagerly awaited U.S. employment figures out on Friday was also preventing investors from taking more active positions.
"Above 10,100, profit taking tends to emerge, because the Nikkei has risen so much over such a short period of time," said Akino.
He added that if the Nikkei can hold above 10,100 in the near-term that would boost the confidence of retail investors, and in turn possibly set the stage for a climb to as high as 10,700.
Foreigners have been shifting funds back to lagging Tokyo equities after U.S. monetary easing lifted expectations of more liquidity in financial markets. If the Nikkei ends November up more than 9.5 percent as it is on track to do so, it would be its biggest monthly percentage gain since last December.
"It's not just short-covering by foreign fund managers -- about 20 to 30 percent of these fund flow is new and comes mostly from European pension funds," said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.
So far this year, Japanese shares have lost over 4 percent, while Hong Kong's benchmark Hang Seng Index <.HSI> has gained 4.8 percent and Wall Street's Dow Jones index <.DJI> has climbed 6.4 percent on the year.
Financial shares, most likely to be impacted by debt woes in the euro zone were slightly outperforming the broader market with banking stocks up 1 percent and other financial stocks about 1.6 percent higher.
Market players said that strong sales during the biggest shopping day in the United States following Thanksgiving, the Black Friday, also bolstered Japanese stocks.
Trading volume was thin at midday, with just 0.9 billion shares changing hands on the Tokyo exchange's first section, on track to come in slightly below the last week's closing average of 1.9 billion shares.
Toshiba Corp <6502.T> climbed 3.1 percent to 437 yen after the saying it plans to cooperate with a Mongolian consultancy to explore rare earths, uranium and other minerals in resource-rich Mongolia.
Kagome Co <2811.T> fell 2.1 percent to 1,489 yen after the maker of tomato juice and ketchup said the Bank of Tokyo-Mitsubishi UFJ would sell up to 2.23 million shares, or 2.2 percent of outstanding shares, in Kagome through a secondary offering. (Additional reporting by Aiko Hayashi; Editing by Edwina Gibbs)