Nikkei set to edge lower on profit-taking

But analysts said that the view that Japanese companies are recovering much faster than expected after the March quake will likely continue lifting stocks this month even if profit-taking emerges at intervals.

"Today, investors are expected to stay on the sidelines after taking profits because they want to see the result of US jobs data this Friday," said Yutaka Miura, a senior technical analyst at Mizuho Securities.

"The Nikkei might lose about 100 points."

China's central bank increased interest rates for the third time this year on Wednesday, making clear that taming inflation is a top priority as its economy slows gently.

Analysts said the impact from China's rate hike should be limited, but investors will keep an eye on how Shanghai stocks react later in the day.

Nikkei futures in Chicago ended at 10,050, 30 points lower than their Osaka close of 10,080.

The Nikkei rose 1.1 percent to 10,082.48 on Wednesday, its highest since the Monday after the quake and tsunami devastated northeast Japan, with a break of resistance at its May 2 peak of 10,017, triggering a rush of buying in futures.

The broader Topix index advanced 1 percent to 873.51, its highest in three months.

Copyright Reuters, 2011