TOKYO, Aug 7 (Reuters) - Japan's Nikkei stock average is likely to edge higher on Friday to try a 10-month high, with carmakers such as Honda Motor Co strong, but gains will be limited by nerves ahead of keenly awaited U.S. jobs data.
Wall Street slipped as investors turned cautious a day before the July employment data and took profits in the wake of recent strong gains, but Tokyo shares are likely to hold firm, analysts said.
"Sentiment is fairly positive, with quarterly earnings having been generally good and growing expectations that the next round of earnings will be even better," said Nagayuki Yamagishi, strategist at Mitsubishi UFJ Securities.
"But with the jobs data ahead of us it'll be difficult for the Nikkei to break above 10,500 today. There's also a sense the Nikkei has been overbought."
Car and car-parts makers are likely to extend gains on growing expectations that the U.S. "cash for clunkers" sales incentive will be extended.
The U.S. economy is expected to have lost 320,000 nonfarm payroll jobs in July, a hefty number but still an improvement over last month's drop of 467,000, while the unemployment rate is expected to have risen to 9.6 percent.
Analysts said the Nikkei's next targets are the psychologically important 10,500 level, followed by 10,800 and then 12,000 -- roughly where it was when U.S. investment bank Lehman Brothers collapsed last year.
The benchmark Nikkei is likely to move between 10,250 and 10,500, analysts said. It closed at 10,388.09, a 10-month closing high, on Thursday.
In a sign that stocks may open higher, Nikkei futures traded in Chicago edged up 0.5 percent from their Osaka close of 10,400. STOCKS TO WATCH
-- Japan Airlines Corp
Japan Airlines (JAL) plans to scrap two international routes, including one to Paris from central Chubu airport, and reduce flights on eight others from October, the Nikkei business daily said.
-- Nintendo Co Ltd
Nintendo's Wii sales last week jumped more than fourfold from the prior week in Japan, driven by the launch on Aug. 1 of Capcom Co Ltd's highly anticipated hunting action title "Monster Hunter 3", research from Ascii Media Works said on Thursday.
-- Pioneer Corp
Consumer electronics maker Pioneer reported a quarterly loss due to sluggish car sales and a stronger yen and stuck to its outlook for a sixth straight year in the red, as it unveiled more job cuts to help turn around its business.
-- Kirin Holdings
Beer maker Kirin said on Thursday it would conclude merger talks with rival Suntory Holdings as early as by the end of this year, as they seek to create a global player in the face of weak growth at home.
-- Elpida Memory Inc
Japanese chipmaker Elpida will buy failed German chipmaker Qimonda's graphics DRAM technology and start shipping the chips, used in high-end PCs and game consoles, in the first half of next year. (Reporting by Elaine Lies; Editing by Chris Gallagher)