* Profit-taking pressures market after 10-mth closing high
* Eyes on Japan's Aug. 30 election, post-election politics
TOKYO, Aug 27 (Reuters) - Japan's Nikkei average fell 1.4 percent on Thursday after hitting a 10-month closing high the previous day, with exporters such as Canon Inc losing steam, while trade remained cautious ahead of the election.
Market players said investors have factored in a big win by Japan's opposition Democratic Party in the Aug. 30 national election and their focus is now shifting to the post-election situation, including who will be the next finance and economy ministers.
"There's a sense of buying fatigue among investors globally and that is leading to profit-taking," said Tsuyoshi Segawa, an equity strategist at Mizuho Securities.
"The external environment that had helped produce gains in the market has started showing signs of waning. The U.S. market could be entering a correction phase and the direction of Chinese stocks remains uncertain."
The benchmark Nikkei shed 147.87 points to 10,491.84. It rose 1.4 percent the previous day to score its highest close since Oct. 3.
The broader Topix declined 1.2 percent to 963.82.
The Democrats lead Prime Minister Taro Aso's Liberal Democratic Party in newspaper polls ahead of the election. An opposition victory would end more than five decades of almost continuous rule by the LDP and raise the chances of breaking a stalemate in a divided parliament.
"The market has factored in a landslide victory by the Democratic Party, but it wants to wait and see what the party will do after the election," said Hiroichi Nishi, general manager at Nikko Cordial Securities.
Tokuyama Corp, Japan's biggest polysilicon maker, tumbled 12 percent to 642 yen after it said it plans to issue 65 million shares in a public offering and an additional 9 million shares in an overallotment option at the end of September, sparking dilution concerns.
Exporters fell, with Canon, the world's largest digital camera maker, sliding 2.2 percent to 3,620 yen.
Kyocera Corp declined 1.8 percent to 7,590 yen and TDK Corp shed 2.9 percent to 5,400 yen.
But Dainippon Sumitomo Pharma Co jumped 3.8 percent to 1,018 yen after the company said its experimental schizophrenia drug, lurasidone, was significantly better than placebo in a pivotal late-stage clinical trial. (Reporting by Aiko Hayashi; Editing by Edwina Gibbs)