* Yaskawa soars after raising forecast
* Dollar-yen impact limited on Japan stocks longer-term - analyst
TOKYO, July 21 (Reuters) - Japan's Nikkei share average edged down on Friday as investors took profits on steelmakers, offsetting gains in Yaskawa Electric and other machinery makers.
The Nikkei ended down 0.2 percent at 20,099.75 points. For the week, the benchmark index dipped 0.1 percent.
A firmer yen also soured the mood as the dollar continued to lose tractiion, though analysts said small gains would not undermine support for the Nikkei around the psychologically important mark of 20,000.
The Nikkei has managed to stay above 20,000 for most of the time since July 10, in which time the dollar dropped to below 112 yen from mid-114 yen.
In the broader market, the Topix dropped 0.2 percent to 1,629.99.
"On a daily basis, the market gets emotional about currency levels, but we don't have to worry too much about the dollar-yen level so often because it has been proven that the Japanese stock market downplayed it in the past few weeks," said Chisato Haganuma, chief equity strategist at Mitsubishi UFJ Morgan Stanley Securities.
"Investors would rather focus on how listed companies such as Yaskawa make profits in emerging markets and other places -shrugging off the currency impact."
Yaskawa Electric jumped more than 15 percent to hit a record high of 2,938 yen after raising its profit forecast.
It expects an operating profit of 45.5 billion yen for the fiscal year through February 2018, up from previously forecast 37.0 billion yen thanks to better than expected demand from China and Korea.
Yaskawa's strong earnings lifted shares or other electronic machinery shares, which rose 0.9 percent, the best performance among the Tokyo Stock Exchange's 33 industry sibindexes.
Machinery shares also gained 0.8 percent.
Canon Inc also attracted buyers, rising 1.4 percent after the Nikkei business daily reported that the company's operating profit for the year ended December 2017 likely was likely to be about 330 billion yen, compared with the company's expectations of 270 billion yen.
Steelmakers, one of best performers so far this month, succumbed to profit-taking, falling 1.2 percent. (Reporting by Ayai Tomisawa; Editing by Eric Meijer and Kim Coghill)