* Investors wary ahead of Europe bank "stress test" results
* Technicals suggest recent falls may be nearing end
* Next support 9,200, just above 9,000 -analysts
By Aiko Hayashi and Elaine Lies
TOKYO, July 21 (Reuters) - Japan's Nikkei average inched down 0.2 percent on Wednesday, weighed down by worries about a stronger yen and doubts over the U.S. economic recovery as the market awaited events later this week, including results of European bank "stress tests".
While charts suggest recent falls in the Nikkei may be coming to an end, a number of lacklustre U.S. indicators including Tuesday's housing starts are keeping investors wary, with few willing to actively buy before Japanese earnings pick up steam next week.
New U.S. home construction hit its lowest level in eight months in June, further evidence that the U.S. economy lost momentum in the second quarter, but a rise in building permits offered hope of a pickup in homebuilding. [
]"We still can't rule out the possibility that some speculative moves ahead of events -- the bank 'stress tests' this week and U.S. jobs data -- will shrink risk-money, leading to a stronger yen," said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.
"Given doubts over the U.S. economic recovery, if something like that were to happen the Nikkei could fall to just above 9,000."
The results of the stress tests, both the aggregate outcome and those of individual banks, will be released on Friday. [
] [ ]The market is also waiting for Fed Chairman Ben Bernanke's twice-yearly testimony before Congress on Wednesday and Thursday, with investors looking for any comments that could boost speculation about more monetary accommodation -- speculation that helped boost Wall Street on Tuesday.
The benchmark Nikkei <
> inched down 21.02 points to 9,279.44, after eking out small gains in early trade. The broader Topix < > slipped 0.3 percent to 830.10.The dollar fell 0.5 percent to 87.11 yen <JPY=>, staying near a 7-month trough of 86.27 yen struck on EBS last week, as fears about a slowing U.S. recovery prompting investors to cut long positions in the greenback.
Market players say support for the Nikkei likely stands firm at 9,200, just under its July 1 close, which was a seven-month closing low. After that, support lies around 9,091, a low hit this month, and 9,076, a low posted in November 2009.
Orders placed through foreign brokers prior to the open showed that foreign investors were net sellers for the second day in a row, with some saying selling by foreign investors of financial shares weighed on the market.
Shares of Nomura Holdings Inc <8604.T>, Japan's top brokerage, were down 4 percent after the Nikkei business daily reported on Monday that smaller rival Daiwa Securities Group <8601.T> likely suffered a loss in April-June, as financial market turmoil stemming from the Greek debt crisis took a toll.
Daiwa shares were down more than 3 percent on Wednesday.
On the technical front, in a sign that recent drops, which saw the Nikkei lose 1.8 percent last week, may be coming to an end, the Nikkei's MACD has narrowly avoided a bearish cross and appears to be levelling out.
Its slow stochastic -- a measure of how oversold the market is and whether it is in a short-term up or down trend -- continues to fall, but now is deep within oversold territory.
Resistance is strengthening at the level of the Nikkei's 25-day moving average around 9,600. The 25-day moving average is a proxy for a one-month moving average and closely watched in Japan.
EARNINGS IN FOCUS
Expectations towards earnings were a main driver in the market.
Shares of Nomura lost 4.2 percent to 453 yen and Daiwa shed 3.2 percent to 364 yen.
The brokerages will report their results next week.
Shares in Pasona Group <2168.T> lost 5.6 percent to 54,000 yen after the staffing service firm forecast a drop in annual profit on Tuesday, citing tough employment conditions and an expected decline in orders in its outplacement services segment.
Earlier the stock fell to 53,000 yen, its lowest in nearly 14 months. [
]But Sapporo Holdings <2501.T> climbed 2.3 percent to 393 yen after the Nikkei business daily said the brewer is likely to report an operating profit of more than 1 billion yen ($11.4 million) for the January-June half, beating previous expectations of a loss of 500 million yen.
That compares with a 1.3 billion yen profit posted in the same period the year before.
Goldcrest Co <8871.T> soared 8.8 percent to 1,714 yen after Mizuho Securities upgraded the apartment developer's rating by two notches to "outperform", saying it is seen oversold following a recent drop.
Mizuho analyst Kazuya Takeuchi also said in a note that Goldcrest has been securing higher profit margins than its peers as it acquired a number of properties when land prices were low. (Editing by Michael Watson)