* Trading likely thin due to holidays overseas
* Investors cautiously await earnings next week
By Ayai Tomisawa
TOKYO, April 22 (Reuters) - Japan's Nikkei slipped on Friday as exporters came under pressure from a stronger yen, triggering profit-taking after sharp rises over the past two days.
But analysts said volume was likely to stay low as overseas markets such as the United States and Britain are closed on Friday for holidays, while market participants remained cautious ahead of earnings reports next week that will reveal the impact of last month's devastating earthquake on corporate profits.
Shares of Canon, which reports on Tuesday, fell 2.1 percent to 3,485 yen. The Nikkei business daily reported that the camera and office equipment maker would likely report an 8 percent fall in first-quarter operating profit and lower its full-year forecast, reflecting the impact of the quake. [ID:nL3E7FL4FP]
"Ahead of major Japanese corporate earnings next week, investors remain cautious. Therefore, they may take profits from recent gains but they probably won't take large positions today," said Kenichi Hirano, a strategist at Tachibana Securities.
The benchmark Nikkei average was down 0.4 percent at 9,644.59, while the broader Topix shed 0.7 percent to 835.78. The Nikkei had gained more than 2.5 percent over the past two days.
Tokyo stocks have recouped about two-thirds of their losses suffered in the aftermath of the devastating March 11 earthquake, but trade has turned more volatile and thinned out ahead of earnings reports.
"Investors have learned to keep their expectations low, so there may not be a sharp fall in the market even if companies release conservative figures for this fiscal year," said Yutaka Miura, a senior technical analyst at Mizuho Securities.
"As long as U.S. markets sustain gains and keep providing a sign that demand is still intact, Japanese manufacturers' stocks may not be sold significantly," he said.
Miura said the Nikkei's support on Friday is seen at its 25-day moving average of 9,588.
Exporters were hurt by the stronger yen, after the dollar tumbled for a third straight day on Thursday as record low interest rates and the crushing weight of the U.S. budget deficit pushed it closer to an all-time trough against major currencies. [ID:nN21298998]
Sony Corp dropping 1.5 percent to 2,471 yen and Nissan Motor falling 1.1 percent to 738 yen.
But oil shares outperformed, with JX Holdings rising 1.0 percent to 530 yen while Japan Petroleum Exploration gaining 0.4 percent to 3,935 yen. (Editing by Chris Gallagher)