* Nikkei drops 0.4 pct as yen weighs on exporters
* Dollar slips to three-week low below 82.52 yen
* SQ, set on Friday, unlikely to have major impact on Nikkei
TOKYO, Dec 7 (Reuters) - Japan's Nikkei average fell on Tuesday as the yen's recent firmness weighed on shares of precision machinery makers and exporters, though stocks generally moved in narrow ranges on a lack of fresh factors.
The Nikkei was weighed by profit-taking after it posted strong gains last week, but investors were unwilling to sell too aggressively on views that Japanese shares are still on an upward trend, analysts said.
"The yen's firmness is putting pressure on the Nikkei. Shares of precision machinery shares are especially under pressure due to the yen's strength on the euro," said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.
Kuramochi said shares of exporters in general were being pressured, while strong prices for crude oil and commodities such as gold were expected to provide support to resource-related shares.
As of mid-morning, the benchmark Nikkei was down 0.4 percent, or 42.35 points, at 10,124.88.
The broader Topix index fell 0.4 percent to 877.80.
"So far we are not overly worried about the yen's recent recovery, but we'll be more concerned should the yen approach 80 (against the dollar)," Kuramochi said.
The euro was under pressure in Asia on views that the euro zone appeared split on how to resolve the region's debt crisis.
The euro was down 0.2 percent against the yen at 109.77 yen.
The dollar slipped to a three-week low of against the yen to below 82.52 yen.
The yen's firmness against the euro weighed on the subindex of precision machinery makers such as Citizen which have strong ties in Europe. Shares in the firm dropped 1.1 percent and the subindex fell 1 percent.
WATCHING ASIA
Investors were watching share prices in other Asian markets due to looming speculation over a possible monetary tightening by the Chinese government.
Market participants were hesitant about taking large positions in the Nikkei ahead of the closely watched settlement price that will be set on Friday, analysts said.
The settlement, known in Japan as the special quotation or "SQ", is calculated from the opening prices of the 225 shares on the Nikkei average on the second Friday of the month.
Still, SQ is unlikely to influence the key Nikkei average as many participants appeared to have completed rolling over their positions to the March contract in the futures market, a Tokyo-based options trader said.
The options trader said Nikkei futures and options contracts expiring in December are expected to settle at around 10,050-10,300, the options trader said. (Reporting by Chikafumi Hodo; Editing by Joseph Radford)