* Nikkei hits peak of 9,885.37 -- highest since June 24
* Investors take profits after drop in Cisco shares
* Nikkei expected to meet strong resistance near 10,000
By Chikafumi Hodo and Aiko Hayashi
TOKYO, Nov 11 (Reuters) - Japan's Nikkei rose to its highest level in 4-½ months on Thursday buoyed by recent falls in the yen against the dollar, but profit-taking and technical selling curbed further gains.
Investors turned cautious about chasing the Nikkei higher following its recent rapid pace of gains and after Cisco Systems shares plunged 14 percent in after hours trade on its dismal revenue outlook, raising worries that U.S. shares could drop later in the day.
"The Nikkei remains strong, but the pitch of the rise was a bit too fast, making some players nervous about extending their purchases," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.
"The dollar is up against the yen and giving support to the Nikkei, but it needs to strengthen further to above 83 yen for the market to push the Nikkei above 10,000."
The Nikkei was up 0.3 percent or 28.68 points at 9,859.20 at the midday break. The benchmark touched an intraday peak of 9,885.37 -- the highest since June 24, when the Nikkei had last traded above 10,000.
Technical trends turned stronger after the Nikkei decisively broke above 9,800 the previous day.
The dollar hit a one-month high against the yen on Wednesday and rose as high as 82.80 yen. In Asian trade on Thursday, it had lost some ground and edged down to 82.06 yen.
The yen's fall drove up shares of exporters. Nintendo gained 1.4 percent to 21,120 yen. Toyota Motor rose 2.3 percent to 3,125 yen.
The broader Topix index climbed 0.4 percent to 856.71.
The Topix slightly outperformed the tech-heavy Nikkei due to the strength of financial shares. Mizuho Financial Group gained 3.2 percent to 131 yen and Nomura Holdings rose 2.7 percent to 459 yen.
Banking shares rose after Deutsche Securities raised its view on the sector to "overweight" from "marketweight", based on the assumption that Japanese banks will not be included as so-called systemically important financial institutions (SIFIs) in new global rules, meaning they may avoid the need to further boost capital.
Bank shares have gained strength since the previous day when the Financial Times reported that most major Asian banks may be exempt from planned new global regulations.
"The trend has very likely changed for the better, and what we're seeing now is a temporary correction of speed," said Fumiyuki Nakanishi, a manager at SMBC Friend Securities.
"Hopes for ample liquidity were revived after the FOMC meeting, and money that has nowhere to go is flowing into major stocks, such as megabanks, because they are easy to trade, rather than due to buying based on market research."
RESISTANCE NEAR 10,000
Still, Japanese market participants were careful about building up more positions as the Nikkei was approaching the closely watched 10,000 level.
Uncertainty about the outlook for Wall Street shares later in the day, following the drop in Cisco as well as other U.S. tech stocks, also discouraged Japanese investors from taking new positions.
"The Nikkei has more room to rise, but we have to also see whether U.S. shares would extend gains from here," said Yutaka Miura, senior technical analyst at Mizuho Securities.
"The market is a bit worried as Wall Street struggled in the last two session and as Cisco shares fell sharply in after-hours trading," Miura said.
Japan's Gree Inc and two other stocks climbed after MSCI announced on Thursday that they would be added to the MSCI Japan Index as of the close of Nov. 30.
Gree, a social-networking site operator, jumped 4.7 percent to 974 yen, while Miraca Holdings, a maker of diagnostic drugs, rose 2.4 percent to 3,005 yen.
Precision machinery producer Nabtesco Corp, which will be added to the MSCI index, hit a session high of 1,609 yen before dropping 0.8 percent to 1,542 yen.
MSCI said it would remove four shares, including consumer financing company Acom, which rose 3.3 percent to 837 yen. (Editing by Chris Gallagher)