* Yen's recovery puts exporters under pressure
* But bargain-hunting provides support
* Foreign funds looking to cover positions in Japan shares
By Antoni Slodkowski and Chikafumi Hodo
TOKYO, Dec 6 (Reuters) - Japan's Nikkei dipped 0.3 percent on Monday after weak U.S. jobs data and a renewed focus on U.S. quantitative easing pushed the dollar down against the yen, spurring profit-taking in Tokyo stocks after they hit a six-month high last week.
But overseas fund operators and Japanese retail investors were looking to purchase on price dips, limiting losses for the Nikkei, analysts said.
"Exporters are under pressure as the yen strengthened, and that is weighing on the Nikkei. But falls are limited as we are seeing solid bargain-hunting," said Takashi Ohba, senior strategist at Okasan Securities.
"Underlying bullish sentiment for Japanese stocks really hasn't changed. The Nikkei still has room to rise," he said.
The benchmark Nikkei closed the morning session down 0.3 percent, or 30.87 points, at 10,147.45.
But the broader Topix index rose 0.1 percent 879.85.
Market participants said the Nikkei is expected to be supported as overseas fund operators still have not completed covering their underweight positions in Japanese shares.
"I think foreign funds are still underweight Japanese stocks so they still need to cover those positions as they have performed well recently," said Tomomi Yamashita, fund manager at Shinkin Asset Management.
The Nikkei has sharply outperformed other major markets over the past month, including Hong Kong, Shanghai and New York's Dow Jones industrial average.
Market participants said the Nikkei is likely to find support around 10,000, while resistance is seen around 10,250 -- near the six-month high reached last week.
"Last week's U.S. jobs data came in far below expectations, but the market is not all that pessimistic as U.S. shares were supported," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Morgan Stanley Securities.
U.S. employment barely grew in November and the jobless rate unexpectedly hit a seven-month high, hardening views the Federal Reserve would stick to its $600 billion plan to shore up the anemic recovery.
The dollar was trading up 0.4 percent at 82.87 yen from late Friday, was still below recent levels.
Among exporters, TDK Corp dropped 0.7 percent to 5,580 yen, while Panasonic fell 1.7 percent to 1,185 yen.
But JFE Holdings Inc gained 2.4 percent to 2,737 yen after the firm said last week it aimed to raise its average steel price by about 5 percent next quarter for automakers, shipbuilders and other steel users in Japan.
Shares of Touei Housing Corp surged 15 percent to 1,232 yen after the Tokyo-area homeseller lifted its 2010/11 earnings forecast amid declining costs for real estate sites and construction services. (Editing by Chris Gallagher)