TOKYO, Dec 7 (Reuters) - Japan's Nikkei average droped 0.3 percent on Tuesday after renewed strength in the yen encouraged profit-taking and as a report that China's central bank may raise interest rates this weekend hurt sentiment.
Chip equipment maker Advantest jumped 3.7 percent at 3.6 times its 30-day average volume after it made a $729 million buyout offer for U.S. rival Verigy Ltd.
But shares in airconditioner maker Daikin dropped around 3.8 percent on high volume after a report said it was in talks to buy U.S. heater and airconditioner manufacturer Goodman Global Group.
The Nikkei closed down 26.13 points at 10,141.10, while the broader Topix index also shed 0.3 percent to 879.10. (Reporting by Antoni Slodkowski; Editing by Joseph Radford)