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Nikkei climbs to 1-week high ahead of BOJ, U.S. jobs

* BOJ expected to stand pat

* Seven & I suffers as weaker supermarket sales hurt

By Dominic Lau

TOKYO, Oct 5 (Reuters) - Japan's Nikkei stock average hit a one-week high on Friday morning, tracking gains on Wall Street, ahead of the outcome of a Bank of Japan policy meeting and key U.S. jobs data.

The Nikkei advanced 0.6 percent to 8,875.07, just breaking above its 75-day moving average at 8,873.40.

The index rose 0.9 percent on Thursday, snapping a four-day losing run, as sentiment was boosted by a strong showing by the pro-business U.S. Republican candidate, Mitt Romney, in his first debate with President Barack Obama, dealers said.

"The market is still very volatile. The real estates were a good sector yesterday. They are not so good today. Within the market, the sector movement is quite sharp and temporary," a senior trader at a foreign bank said.

The real estate sector was flat after surging 2.8 percent on Thursday, while Toyota Motor Corp

slipped

0.8 percent after climbing 3 percent in the pervious session.

The Yomiuri newspaper said Toyota's sales in China halved last month from August levels as anti-Japan sentiment in a row over disputed islands in the East China Sea took its toll.

Rival Nissan Motor Co lost 1 percent.

Overnight, the U.S. S&P 500

extended gains to a fourth day, putting it on the cusp of a new five-year high if Friday's jobs report shows encouraging signs for the labour market.

Economists in a Reuters survey forecast 113,000 jobs were created in September compared with 96,000 jobs created in August, while the unemployment rate is seen at 8.2 percent, versus 8.1 percent in August.

Another trader said the market was likely to take a positive view on the nonfarm payrolls data whether it was good or bad.

He said if it came above expectations, it would give some relief to the market on the basis that the U.S. labour market is improving, while if the figure disappointed, it could strengthen Romney's bid for presidency.

But before that, the BOJ is expected to keep monetary settings unchanged to spend some time reviewing the effect of its policy loosening last month. Weakening manufacturing activity in Asia, however, continues to cloud the outlook.

Seven & I Holdings Co

lost 2.5 percent after its quarterly profit fell 2.5 percent as weaker sales at its supermarkets offset growth from its convenience stores, leading Japan's top general retailer to pare its annual outlook.

But Ryohin Keikaku Co Ltd

, which produces and sells clothing and household goods, climbed 3.9 percent after it raised its operating profit forecast for the year ending February 2013 on the back of solid first-half earnings.

The quarterly earnings season will move into high gear in the next two to three weeks. Investors were disappointed with the previous quarterly earnings, when 54 percent of Nikkei companies reported results below analysts' expectations.

For this quarter's results, SmartEstimates from Thomson Reuters StarMine expects an average negative earnings surprise of 1.2 percent.

The broader Topix

index added 0.3 percent to 737.53.

The benchmark Nikkei is up 5 percent so far this year, trailing a 16.2 percent rise in the S&P 500 and an 11 percent gain in the pan-European STOXX Europe 600

index.

Japanese equities are slightly more expensive than their European peers, with a 12-month forward price-to-earnings ratio of 11.4 versus STOXX Europe 600's 11.1, according to Thomson Reuters Datastream. The S&P 500's 12-month forward P/E stands at 12.8.

(Editing by Richard Pullin)

((dominic.lau@thomsonreuters.com)(+81 3 6441 1917)(Reuters Messaging:)(dominic.lau.thomsonreuters.com@reuters.net))

Keywords: MARKETS JAPAN STOCKS/