Nikkei eases from 1-week high, still on target for best year since 1972
* Nikkei slips a day after posting best one-day rise in 3 months
* Investors pocket gains ahead of year-end
* Nikkei still up more than 50 pct YTD
TOKYO, Dec 10 (Reuters) - Japan's Nikkei stock average pulled back from a one-week high on Tuesday as investors booked gains before the year-end, with the benchmark heading for its best annual rise since 1972. The Nikkei slipped 0.4 percent to 15,577.67 after rallying 2.3 percent on Monday, its best one-day gain in three months, spurred by a slide in the yen after an upbeat U.S. jobs report raised expectations the Federal Reserve will soon begin removing its stimulus. "We are seeing some programme accounts profit-taking," a senior dealer at a U.S. bank said. "Our flow is not heavily tilted to one way or another. But I would say in general it feels like we are in a bit of a profit-taking phase right now." He said U.S. long/short accounts had been quiet lately and that macro-driven funds were the active players in the market. "If those people are starting to shut down, I would imagine they would probably start closing up for the year after SQ this Friday," he said, referring to the settlement of stock and index options and futures. Index heavyweight SoftBank Corp, the most traded stock on the main board, dipped 0.6 percent, giving up some of Monday's 2.2 percent rise. As of Monday's close, the mobile operator was the best gainer in the Nikkei so far this year, up more than 180 percent. Toyota Motor Corp, Honda Motor Co Ltd and Hitachi Ltd all took a breather, down between 0.5 and 0.7 percent. Yahoo Japan Corp bucked the trend, up 4.2 percent to a two-month high, adding to the previous session's 6.4 percent rally after Goldman Sachs upgraded the stock to 'buy' from 'neutral' and added it to its list of 'conviction buy.'
The broader Topix index eased 0.1 percent to 1,254.86 in early morning trade, with volume at 14 percent of full daily average for the past 90 trading days. Driven by Tokyo's aggressive fiscal and monetary stimulus, the benchmark Nikkei is up 50.5 percent in local currency terms this year, the best among major developed markets. If the gains were to hold for the rest of the year, it would mark the Nikkei's biggest yearly rise since 1972.
Still, there were signs of possible bumps ahead. Large Japanese manufacturers grew less optimistic about business conditions in October-December, a government survey showed on Tuesday, suggesting that domestic demand may be faltering.
A Reuters poll showed almost two-thirds of Japanese firms expected the Bank of Japan will increase its stimulus in the first six month of 2014, underscoring the pressure on the central bank to remain the engine of growth. "Expectations of further BOJ easing in 2014 appear to be building, as reflected in recent Japanese yen weakness," strategist at UBS wrote in a note. They said net buying of Japanese equities by UBS clients rose last month to its highest level since May and that Japan was the most favoured region among its clients over both the last four and 12 weeks.