Nikkei set for 9th winning day as yen weakens further

* Nippon Steel & Sumitomo Metal jump, to cut capacity

* BNP Paribas advises buying regional bank shares

* Analysts see small pullback coming up

TOKYO, March 12 (Reuters) - The Nikkei share average rose on Tuesday to a fresh 4-1/2 year high, as a softer yen and expectations of monetary easing drove up banks like Mitsubishi UFJ Financial Group and as overlooked electronics firms such as Panasonic attracted buying. But the benchmark's advance was timid with signs of overheating beginning to emerge as it headed for its ninth straight day of gains, the longest winning streak since July 2009. "I think the market's got a strong base but the Nikkei's divergence from its 25-day moving average may signal a small pullback coming up," said Kenichi Hirano, operating officer at Tachibana Securities. The Nikkei was 7.3 percent above its 25-day moving average after rising for eight consecutive days, its longest daily winning streak since July 2009, when it rose for nine days straight. The Nikkei added 0.4 percent to 12,391.84 in the morning session on Tuesday, its highest level since early September 2008. The broader Topix edged up 0.4 percent to 1,044.39. Nippon Steel & Sumitomo Metal Corp jumped 6 percent after the company said it would halt a blast furnace at a major steel mill in a bid to cut costs and resolve overcapacity. The share rise helped the steel subindex become the top sectoral gainer, gaining 3.1 percent. Japan Tobacco was in focus after the government, which owns a 50 percent stake in the cigarette maker, cut the price of its share offer by 2 percent from Monday's close. The stock fell 0.5 percent. Exporters were buoyed by a weaker yen, which slumped to a new 3-1/2 year low in early Asian trade on media reports that the Bank of Japan might deliver new stimulus measures sooner than expected. Nissan Motor Co led major automakers with a gain of 2.1 percent. Analysts said the spotlight on exporters, financials and real estate companies may become more diffuse as the Nikkei's rally consolidates. "Global funds, which have not yet wholeheartedly joined the rally, tend to think of the bigger picture: they hear 'Abenomics' and they think of pricey real estate," said Tachibana Securities' Hirano. "But there are a lot of retail investors going after high-yield, lesser-known names that aren't in the Nikkei."

YEN WEAKNESS Some analysts said the Nikkei was not necessarily due for a major correction because the yen's weakness would help boost earnings for Japanese exporters. "Although the equity rally appears to be faltering, the yen is still weakening. Also there are mounting expectations for the U.S. economy to recover," said Yoshihiko Tabei, general manager of capital markets research at Kazaka Securities. "Judging by domestic companies' expected revenues, I don't think current stock prices are overvalued," he said. BNP Paribas recommended investors buy banks that have underperformed in the rally, such as regional lenders, as well as Nikkei dividend futures to take advantage of current rally. Top banks Mizuho Financial Group Inc, Mitsubishi UFJ Financial Group Inc and Sumitomo Mitsui Financial Group Inc gained between 0.2 and 1.1 percent on Tuesday morning and were three of the top four most-traded stocks on the main board. lost 2.1 percent, Bank of Iwate dropped 1 percent and Hokuetsu Bank fell 1.3 percent. "Of course, banks are the obvious bet at the moment, but there are a lot of other interesting stocks," said Takashi Oba, senior strategist at Okasan Securities. "There are a lot of investors just waiting for dips to swoop in. Canon and Panasonic are zooming up today after being left behind in the rally. Kyocera is getting a lot of play too." Panasonic Corp shot up 7.2 percent after putting on just 0.8 percent between February 15 and Monday, trailing the Nikkei's gain of 10.5 percent in the same period. Canon Inc advanced 3.1 percent and Kyocera Corp jumped 5.3 percent.