* Nikkei pokes above Ichimoku cloud, but mood cautious
* Retail investors looking to sell on rallies -analyst
* Kyorin jumps after report Sawai wants to acquire it
By Masayuki Kitano
TOKYO, Sept 21 (Reuters) - Tokyo's Nikkei average edged higher on Tuesday to hit a seven-week intraday high, building on gains made since Japan intervened last week to weaken the yen although market players were cautious about how much further the benchmark could advance.
Mid-sized drugmaker Kyorin soared on a report that generics drug maker Sawai Pharmaceutical Co wanted to acquire it while Canon climbed following a report that strong demand has prompted it to plan a new overseas inkjet printer plant.
A rise in U.S. shares the previous day and the yen's recent slip back from a 15-year high against the dollar in the wake of the currency intervention helped lend support to Tokyo shares.
"It's hard to be bullish, but excessive worries that the market might fall have receded," said Yutaka Miura, a senior technical analyst at Mizuho Securities.
The Nikkei hit a seven-week intraday high of 9,704.25. After trimming some gains, the benchmark index was 0.4 percent higher on the day at 9664.52. It has risen 3.9 percent compared to last Tuesday, the day before Japanese authorities conducted yen-selling intervention.
The broader Topix index gained 0.4 percent to 855.35.
The Nikkei edged above resistance near 9,660, which is right around the top of the cloud on daily Ichimoku charts. A clear break of that level would be a bullish sign.
Market players, however, remain cautious about the outlook.
Masayuki Doshida, market analyst at Matsui Securities, said gains in Tokyo shares may be limited due to potential selling by retail investors, who had bought Tokyo shares back in April to June, even as the market fell over that span.
"When the Nikkei rises above 9,500 or so, selling on rallies from (retail) customers who had been buyers during the slide and are carrying losses tends to appear," Doshida said.
"I think that is helping put a lid on the market."
In addition, worries persist that the yen may strengthen again, even in the wake of intervention. Japan sold an estimated 1.8 trillion yen (over $21 billion) last Wednesday, a record for a single day, to help its exporters and to counter deflation.
Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management said institutional investors were also reluctant to move ahead of the end of the first half of Japan's fiscal year at end-September.
He added that one point to watch in the coming months is whether markets will start bracing for the possibility of further monetary easing by the Fed later this year and if that happens, whether Japan can keep the dollar above the 85 yen level.
"One key is whether the U.S. stock market will manage to sprint higher, looking ahead to the possibility of further monetary easing in November," Akino said, referring to the Fed's next policy meeting after a meeting on Tuesday.
The U.S. Federal Reserve is expected to tread water at a policy-setting meeting on Tuesday with a renewed promise to keep its portfolio from shrinking but no new steps to ease monetary policy.
Kyorin surged 15.1 percent to 1,389 yen. The Nikkei business daily said on Saturday that Sawai Pharmaceutical had bought almost 5 percent of Kyorin and had sent it an acquisition proposal.
Among gainers, Canon surged 2.6 percent to 3,950 yen after the Nikkei business daily reported that the company plans to spend about 15 billion yen ($175 million) to build a new inkjet printer plant in Thailand amid soaring demand in China and the rest of Asia.
Resource-linked shares rose after after oil, gold and other commodities gained the previous day, with oil and gas field developer Inpex rising 2.1 percent to 408,000 yen and trading house Mitsubishi Corp gaining roughly 1 percent to 1,974 yen. (Editing by Edwina Gibbs)