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Nikkei falls, heads for 1st weekly loss in 3 weeks; Murata jumps

* Nikkei sheds 1 pct, Topix down 0.9 pct

* Investors' attention turns to domestic earnings

* Murata up after raising half-year profit forecast

By Tomo Uetake

TOKYO, Oct 25 (Reuters) - Japan's Nikkei stock average

sagged on Friday morning as investors fretted over the yen's

level against the dollar, and opted to wait for a big week in

the earnings season to confirm that Corporate Japan is in good

health.

The benchmark Nikkei shed 1 percent to 14,351.34,

after advancing 0.4 percent to 14,486.41 in the previous

session, and was on track to end the week lower. The benchmark,

however, hit a two-week low of 14,273.71 intraday on Thursday.

Stefan Worrall, director of equity cash sales at Credit

Suisse in Tokyo said he was surprised the Nikkei had not

followed Wall Street's gains.

"The market is in two minds right now...I put that down to

the inability of the yen to weaken, some wait-and-see before the

bulk of earnings next week, and also perhaps some concerns about

China."

Wall Street resumed its upward move on Thursday as weak

economic data underscored views that Federal Reserve's monetary

stimulus programme will be in place for the foreseeable future.,

Corporate earnings offered some bright spots, although the

rate of growth in U.S. manufacturing output fell for the first

time in four years, and the number of new claims for

unemployment benefits fell less than expected last week.

The yen was last quoted at 97.28 yen to the dollar.

The broader Topix dropped 0.9 percent to 1,192.77 in

moderate trade, with volume at 31.7 percent of its full daily

average for the past 90 trading days.

Murata Manufacturing Co Ltd climbed as much as 6.1

percent to hit a 4-1/2-month high after the component supplier

for Apple Inc raised its April-September operating

profit forecast. It was the seventh-most traded

stock by turnover on the main board.

Canon Inc fell 1 percent after cutting its

operating profit outlook for a second straight quarter as a

slump in demand for high-end cameras dragged on.

It was the eighth-most traded stock by turnover on Topix.

Shin-Etsu Chemical Co Ltd dropped 2.6 percent after

the world's biggest maker of PVC and silicon wafers left its

full-year operating profit forecast unchanged on Thursday.

Analysts expect that many Japanese companies are likely to

post upbeat results or raise their annual earnings projections

during this earnings season.

Corporate earnings news will continue to pour in on Friday,

with companies such as JFE Holdings Inc and NTT DoCoMo

Inc planning to report later in the day.