Nikkei flat ahead of U.S. jobs data but Hitachi up

                                
 * Investors cautious ahead of U.S. data
                                
 * But upbeat mood intact
                                
 * Hitachi jumps on report of lithium ion batteries
                                
 By Aiko Hayashi
                                
 TOKYO, July 2 (Reuters) - Japan's Nikkei average was flat on
on Thursday as caution set in ahead of U.S. jobs data, but
Hitachi Ltd <6501.T> jumped on a report that it will boost
production of lithium ion batteries for hybrid cars.
                                
 Market analysts said the Nikkei is due for a pause after
recovering some 40 percent from its March lows, though the
overall mood remained upbeat, reinforced by reassuring
manufacturing data from Europe, China and the United States.
                                
 "The market is at a standstill right now after overshooting
recently and as it just under 10,000. It will likely spend July
and August -- the summer months when trade is thin --
consolidating around the 10,000 level," said Fumiyuki Nakanishi,
manager at SMBC Friend Securities.
                                
 The benchmark Nikkei <.N225> was unchanged at 9,940.12. On
Wednesday, it briefly touched its highest in about two weeks
above 10,000, before ending the day slightly lower.
                                
 The broader Topix <.TOPX> was also flat, at 929.12.
                                
 "The overly optimistic view on the economy has been modified
and that is prompting investors to adjust positions in blue-chip
stocks. For further gains, the market needs to see more
improvement in the fundamentals of the economy," said Takahiko
Murai, general manager of equities at Nozomi Securities.
                                
 "Still, environment-related stocks such as battery makers are
faring pretty well as they are the flavour of the month."
                                
 The U.S. employment report, which is due on Thursday as U.S.
markets will be shut on Friday for the Independence Day holiday,
is expected to depict an economy still wallowing in recession but
it will likely confirm the pace of job loss has slowed.
[ID:nN01511504]
                                
 The Dow Jones industrial average <.DJI> rose 0.7 percent on
Wednesday. Surveys from Europe showed manufacturing was shrinking
less than initially thought and in China's case, growing
modestly, while other data showed the U.S. manufacturing sector
contracted in June but at a slower pace than in May.
[ID:nPEK138883] [ID:nN01366244]
                                
 HITACHI SHINES
                                
 Hitachi shares climbed 4.4 percent to 311 yen after the
Nikkei business daily reported the company plans to boost
production capacity for lithium ion batteries for hybrid cars,
targeting a 70-fold increase by 2015. [ID:nBNG508790]
                                
 Pacific Metals <5541.T>, Japan's largest maker of ferro
nickel, surged 5.6 percent to 772 yen after nickel prices jumped
more than 5 percent and hit a nine-month high on Wednesday.
[ID:nL1684431]
                                
 Shares of Nissan Motor Co <7201.T> rose 1.9 percent to 595
yen after U.S. sales data for June showed it outperforming the
industry and domestic rivals Toyota Motor Corp <7203.T> and Honda
Motor Co <7267.T>. [ID:nN01515238]
                                
 Toyota Motor Corp <7203.T> clawed higher 0.6 percent to 3,650
yen, after a German magazine reported it may build derivatives of
Mercedes-Benz's <DAIGn.DE> cars to better utilise its European
plants. [ID:nN01523815]
                                
 Recent gainers that ran out of steam include Advantest Corp
<6857.T>, which slid 1.5 percent to 1,739 yen.
                                
 Trading volume was in line with last week's morning average,
with 1.0 billion shares changing hands on the Tokyo exchange's
first section.
                                
 Advancing shares just beat declining ones, 763 to 750.
 (Editing by Edwina Gibbs)