* Nikkei drifts from support at 10,000 to 10,400 resistance
* Tech shares edge up, JVC surges on profit report
* Showa Shell Sekiyu climbs on solar cell plant news
By Elaine Lies
TOKYO, Sept 8 (Reuters) - Japan's Nikkei stock average was flat on Tuesday, pressured by falls in Honda Motor Co and other exporters on a stronger yen, though bargain-hunting on dips lent support.
JVC Kenwood Holdings Inc surged 23 percent on a report that it was likely to post its first operating profit in three quarters while oil refiner Showa Shell Sekiyu advanced after it said it would invest $1.1 billion to build a new thin-film solar cell plant.
Market player said that while investors were holding back in the wake of a U.S. holiday on Monday and ahead of the settlement of Nikkei futures and options on Friday, sentiment was bolstered by gains in overseas equities markets.
"European and Indian shares were quite strong -- Indian shares hit their highest this year -- and this encouraging international picture should help," said Kenichi Hirano, operating officer at Tachibana Securities.
India's main stock index climbed 2.1 percent on Monday to its highest close in 15 months, helped by positive company announcements, firmer global markets and signs investor appetite for IPOs remain robust despite muted recent stock market debuts.
But others said that the Nikkei remained overdue for a correction and that it was actually holding up surprisingly well, given the yen's advance as the greenback fell back below 93 yen.
"This is basically just a bit of adjustment after the market rose 50 percent from its March lows," said Fumiyuki Nakanishi, a group manager at SMBC Friend Securities.
"It actually wouldn't be surprising for the Nikkei to fall below 10,000, but there's a wave of bargain-hunting every time it heads down towards that level, and this shows that sentiment remains fundamentally strong."
The benchmark Nikkei lost 3.75 points to 10,317.19 after starting the day positive and edging back up towards its 25-day moving average around 10,400 -- a key resistance that analysts say it must break to establish a rebound.
The broader Topix shed 0.4 percent to 941.28. TRADE TO PICK UP Trade on Monday was extremely thin, with turnover falling to its lowest since mid-July, but market players said this was due more to seasonal factors than to investor worry ahead of the formation by the novice Democratic Party of a new government.
Orders placed through foreign securities houses ahead of the start of trade have shown foreign investors, long a key driver and setter of direction for the Nikkei, to be net sellers virtually every day since the election on August 30.
"While it's true there were a lot of expectations for the new government on the part of foreign investors, the fact that there has been a change is still positive in their minds," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities. "The drop-off in market activity is mainly due to seasonal factors, such as the U.S. Labour Day holiday, and not to worries about the new government. Trade should start picking up soon."
JVC Kenwood surged 23 percent to 60 yen and Showa Shell Sekiyu gained 2.6 percent to 998 yen. Tech-related firms clung to earlier gains, with Advantest edging up 0.9 percent to 2,345 yen and Tokyo Electron up 0.2 percent to 5,010 yen.
Orders for Advantest's chip testers and other equipment in July-September were better than expected and are likely to beat the 11.6 billion yen logged in the previous quarter, the Nikkei business daily quoted Advantest President Haruo Matsuno as saying.
Japan Tobacco (JT) rose 3.6 percent to 292,100 yen after Goldman Sachs analyst Katsunori Tanaka upgraded the company's shares to "buy" from "neutral" and added JT shares to Goldman's "Japan Conviction List".
But exporters lost ground as the yen advanced, with the dollar shedding 0.3 percent to 92.76 yen. Investors fret about a stronger yen because it eats into exporter profits made abroad when repatriated.
Honda slipped 1.4 percent to 2,890 yen, while Toyota Motor Corp fell 1 percent to 3,840 yen, despite reports that it will hire 800 temporary workers in October for factories in Japan to meet growing demand for hybrid cars.
Trading volume fell off, with 856 million shares changing hands on the Tokyo exchange's first section, down from last week's morning average of 942.6 million shares.
Declining shares slightly outnumbered advancing shares by 782 to 689. (Reporting by Elaine Lies; Editing by Edwina Gibbs)