* Nikkei drifts down after hitting 5-mth high above 9,900
* Weaker yen encourages foreign buying
* Japanese institutional investors seeking bargains -analysts
By Aiko Hayashi and Chikafumi Hodo
TOKYO, Nov 16 (Reuters) - Japan's Nikkei ended slightly lower on Tuesday, losing steam after touching a five-month intraday high as profit-taking set in amid worries over the outlook for corporate profits and the impact of tighter credit in China.
The Nikkei, a laggard compared to other major stock markets this year, has been on an upward trend since the start of the month, helped by the Federal Reserve's quantitative easing that has brought expectations of increased liquidity for global shares.
The benchmark now faces resistance at its 200-day moving average, around 9,923.
Market participants say foreign investors have been active buyers of Japanese shares since last week, especially after the dollar reclaimed some ground against the yen.
Selling of Japanese government bonds has also benefited the domestic stock market, with JGB yields climbing on the growing view that a Fed-inspired bull run in U.S. Treasuries was over.
"Foreign institutions, such as pension funds, have been allocating part of their funds into Japanese stocks to build up their positions from almost nothing," said Hideyuki Ishiguro, supervisor at Okasan Securities' investment strategy department.
But fund managers also said that the recent weakening in the yen was not enough to keep pushing the market higher and further gains for the Nikkei are likely to be gradual as worries over earnings remain and Chinese shares struggle amid concerns over additional credit tightening in China .
"Corporate earnings have been solid so far, but outlooks are weak. Other stocks markets are also pausing, and at this point investors find it hard to lift the Nikkei beyond 10,000 just because Japanese stocks have been lagging," Kazutaka Oshima, president of Rakuten Investment Management.
The benchmark Nikkei average closed down 0.3 percent or 30.41 points at 9,797.10 in light trade after climbing as high as 9,908.30, its highest since June 24.
The broader Topix fell 0.5 percent to 847.77.
Although foreign investors were looking to buy on dips, Japanese retail investors were eager to lock in profits above 9,800 -- the level where they were believed to have built up fresh positions in the summer, traders said.
Trade was light on the Tokyo exchange's first section, with 1.8 billion shares changing hands, compared with a one-month high hit last week above 2.2 billion. Declining stocks outnumbered advancing ones by more than 2 to 1.
Energy-linked shares slipped as U.S. crude futures fell after the dollar extended its recent gains, with Inpex Corp, Japan's top oil explorer, declining 2.1 percent to 424,000 yen.
But gains in exporters helped support the market. Sony Corp rose 1.8 percent to 2,841 yen.
Consumer lenders jumped after Nomura Securities raised its ratings on companies such as Acom, Promise and Aiful, saying regulations introduced in June were unlikely to have a major effect on their earnings.
Acom's shares jumped 3.9 percent to 997 yen.
So far this year the Nikkei is down about 7 percent. By contrast, the Dow Jones industrial average has gained more than 7 percent, while the MSCI index of Asia-Pacific stocks outside Japan has added about 12 percent.
The dollar touched a near 6-week high of 83.28 yen on trading platform EBS, boosted by recent rise in U.S. Treasury yields, but in late Asian trade it slipped back to around 83.06 yen. (Editing by Edwina Gibbs)