* Nikkei flirts with 200-day MA after 2-week high, backs off
* Weaker yen, higher commodities prices bolster Nikkei
* Property shares jump on Goldman Sachs upgrades
* Market awaits U.S. payrolls data
By Chikafumi Hodo and Antoni Slodkowski
TOKYO, April 1 (Reuters) - Japan's Nikkei average began a new financial year with a small gain on Friday, running out of steam after hitting a key technical resistance level, with investors piling back into property shares seen as oversold.
Portfolio managers said gains were limited as investors wanted to lighten recently built positions ahead of the weekend and before the release of U.S. payrolls data later in the day.
Japan's stock market took heart from a softer yen and strength in shares of trading houses and oil companies such as Japan's biggest oil and gas developer Inpex Corp , due to rallies in commodities prices the previous day.
In afternoon trade the benchmark Nikkei climbed as high as 9,822.06, hitting its 200-day moving average and the highest level since a panic sell-off on March 14, when trade resumed after the earthquake and tsunami.
The Nikkei was supported by follow-through buying on a weaker yen, after posting solid gains over the last two sessions.
It backed off to 9,775.27, up 0.2 percent from Thursday's close, while the broader Topix was little changed at 869.32.
"The Nikkei has been pretty volatile recently. But now the market's focus is on U.S. jobs data tonight before deciding what to do next," said Shoji Yoshigoe, deputy general manager at Mitsubishi UFJ Morgan Stanley Securities.
"The Nikkei is supported by shares related to commodities and resources," Yoshigoe said.
Still, Japanese stocks drew support after the yen slipped to a fresh three-week low against the dollar. The dollar traded at around 83.60 yen .
"Considering that today is the start of the new financial year we saw some solid buying at the beginning, but the market turned careful about extending purchases," said Kazuhiro Takahashi, general manager at Daiwa Securities.
"PARTICULARLY BULLISH"
Shares in Japan's two biggest publicly traded property firms, Mitsubishi Estate Co and Mitsui Fudosan Co , jumped over 3 percent after Goldman Sachs said in a report that property shares were oversold on post-quake concerns.
The brokerage reinstated its "buy" rating for Mitsubishi Estate, adding it to its conviction list, and upgraded Mitsui Fudosan to "buy" from "neutral".
Despite the rebound, Mitsubishi Estate and Mitsui Fudosan are still 11-12 percent below pre-quake levels after being sold on worries over rent declines, planned outages and delays in handovers of condominiums
"We are particularly bullish on Mitsubishi Estate and Mitsui Fudosan, which we see as undervalued," said Analyst Sachiko Okada, adding that quake-affected areas account for very little of the firms' profit.
OIL SHARES, TRADERS, TEPCO
Shares in Japan's biggest oil and gas developer, Inpex Corp , and other oil-related companies extended solid gains made after the earthquake, as the price of oil hit a 2-1/2-year high on Thursday on ongoing supply threats due to turmoil in Libya and the Middle East.
Inpex jumped 4.3 percent to 658,000 yen in heavy trade. It has surged nearly 20 percent since the quake, while the benchmark Nikkei has lost more than 7 percent in the same period, as the disaster spurred demand for oil and gas products amid a shortage of energy supplies.
Trading houses advanced after the Reuters-Jefferies CRB index , a measure of 19 mostly U.S. commodity futures, finished the first quarter with a strong 8.0 percent gain as global economic improvement began to take hold.[ID:nN31561963]
Marubeni , Japan's No.5 trader, rose 2.5 percent to 614 yen, while second-ranked Mitsui Co Ltd climbed 1.7 percent to 1,516 yen in heavy trade.
Shares of Tokyo Electric Power Co (TEPCO) plunged 7.3 percent to 421 yen and closer to the all-time low of 393 yen after advancing shortly after the opening.
The Mainichi newspaper, quoting an unnamed government official, said on Friday the Japanese government was planning to inject funds into the utility but was unlikely to take more than a 50 percent stake in it.[ID:nL3E7EV46V]
Traders said TEPCO shares are mainly driven by short-term speculators, trying to take advantage of massive volatility in the shares since the earthquake.
"TEPCO is not a normal share any more," said a trader at a Japanese brokerage house.
"But more than fundamental factors, speculators are simply flocking into TEPCO shares and trading them aggressively, taking advantage of extremely heavy volatility," he said. (Additional reporting by Hideyuki Sano; Editing by Michael Watson)