* Property leads gains on Nomura Securities target share hike
* Wall St reaction to 'Jobs shock', Apple's earnings eyed
* Steelmakers lower on report of profit drop
* Hopes for strong U.S. earnings lend support -analyst
* Shanghai falls less, impact limited -analyst
By Antoni Slodkowski
TOKYO, Jan 18 (Reuters) - Japan's Nikkei average received a boost from property shares to edge higher on Tuesday, but investors waited to see Wall Street's reaction to news that Apple Inc CEO Steve Jobs was again taking medical leave.
Market players said the Shanghai market's 0.5 percent slip would have a limited impact on the Nikkei. Shanghai lost 2 percent the previous day on China's latest move to fight inflation.
The Nikkei was trapped in a tight range moving in and out of a positive territory as strong gains in real estate shares were offset by declines in steelmakers after a report by the Nikkei business daily that Nippon Steel Corp would likely fall short of its pretax profit forecast.
"The 'Jobs shock' can move not only individual shares or sectors but whole indexes, so obviously investors will look closely at how the U.S. market reacts to both earnings and the news about Jobs," said Norihiro Fujito, a senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
Apple's announcement that Jobs would take medical leave for the third time since 2004 knocked U.S. stock futures sharply lower. It came when U.S. markets were closed for the Martin Luther King holiday and ahead of the firm's earnings report due on Tuesday.
"Investors may take profits on Apple first, but because it's expected to post strong results Tokyo players want to wait for the figures and how U.S. investors react," Fujito said.
Analysts said the news could have a huge impact on share moves because Apple accounts for around 7 percent of the Nasdaq Composite's market capitalisation.
By midday the benchmark Nikkei was up 0.2 percent or 18.41 points at 10,521.27. Resistance for the benchmark looms at 10,620.57, an eight-month peak hit last week, market players said. If that is breached the next target investors are eyeing is 10,638.23, a high hit in May last year.
The broader Topix index rose 0.4 percent to 932.58.
"The market is surprisingly strong. Despite signs of overheating it's still advancing, boosted by hopes for strong earnings by U.S. companies," said Yumi Nishimura, a senior market analyst at Daiwa Securities Capital Markets.
Investors will look for clues that the U.S. economy is on a sustainable recovery path in results to be announced later in the week by economic bellwether General Electric and tech names such as Google and eBay.
PROPERTY GAINS
"The mood in the market is also strong thanks to continuous buying by foreign investors, supporting stocks in sectors such as real estate and banks," said Daiwa's Nishimura.
The property sector was among top gainers, adding 1.8 percent, after Nomura Securities hiked its target prices for eight property firms on a pickup in the real estate market.
Shares in Mitsui Fudosan Co rose 1.3 percent to 1,752 yen and Tokyu Land Corp gained 1.4 percent to 443 yen, while Mitsubishi Estate Co Ltd jumped 3.4 percent to 1,627 yen.
Foreign funds have been piling into real estate shares supported by the Bank of Japan's asset buying scheme and as vacancy rates in high-grade buildings in Tokyo fell in the October-December quarter.
The property sector has gained around 20 percent since the scheme was launched in October, outperforming the Nikkei's 13 percent rise over the same period.
Steelmakers were among the biggest decliners after a report by the Nikkei business daily that Nippon Steel will likely post a pretax profit of about 220 billion yen ($2.66 billion) for the year ending in March, about 30 billion yen below its forecast.
"This fall reflects higher commodities prices that have been benefiting trading houses such as Mitsubishi Corp," said Mitsubishi UFJ Morgan Stanley's Fujito.
Nippon Steel fell 1.4 percent to 293 yen and JFE Holdings Inc lost 1.6 percent to 2,782 yen. ($1=82.66 Yen) (Reporting by Antoni Slodkowski; Editing by Michael Watson)