Nikkei Edges Up; Investors Eye Key 8,577 Level

The Nikkei average edged up Friday, with investors focused on whether the benchmark can hold above its 25-day moving average ahead of crucial U.S. employment data later in the day.

In the euro zone, the new president of the European Central Bank, Mario Draghi, signaled Thursday that the bank was ready to act more aggressively to fight Europe's debt crisis if political leaders agree next week on much tighter budget controls in the 17-nation euro zone.

Draghi's comments came after central banks' agreed to offer cheaper dollar funding to struggling European banks, a move that pushed Tokyo stocks higher for the second day as it eased worries about an immediate meltdown in the global financial system.

The decision by global central banks was just a way to buy time and it doesn't change the fundamental challenges in Europe, said Seiki Orimi, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

But the move showed resolve that they will not have another financial crisis.

The benchmark Nikkei <.N225> added 0.2 percent to 8,613.28 by the midday trading break, above its 25-day moving average of 8,577, though market participants warn if it falls below that level, it could prompt a sell-off later in the session.

The broader Topix index <.TOPX> gained 0.1 percent to 741.01.

Volume was thin, with about 791 million shares changing hands on the main board, suggesting the day's volume could fall below Thursday's full-day total of 2 billion shares.

Markets are looking to the U.S. employment numbers before moving and the uncertainties in Europe are still keeping many participants out of the market, so despite slight ups and downs based on sentiment, we remain stuck at a low level, said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

Market participants also said they expect position-adjustment selling ahead of the weekend.

Investors remain cautious ahead of the December 9 Brussels summit of European leaders, seen as a make-or-break moment for the currency bloc.

Social gaming company DeNA (2432.T) rose 6.1 percent to 2,471 yen after the sale of the struggling Yokohama BayStars team from Tokyo Broadcasting System to the company was approved.

JPMorgan raised its rating to overweight from underweight, and Credit Suisse also started coverage of the company at outperform.

Honda Motor (7267.T) underperformed the auto sector, dropping 0.7 percent to 2,467 yen, after the company's U.S. auto sales dropped 6 percent in November, having fallen every month since May.

The firm's U.S. market share tumbled from almost 11 percent to just over 8 percent in the same period, as Honda lagged rivals in recovering from supply disruptions caused by the March earthquake.

Toyota Motor Corp (7203.T) added 0.1 percent and Nissan Motor Co (7201.T) was up 0.6 percent.

Japan's textile machine makers jumped after China's monetary easing this week raised hopes for stronger sales in the country, where large manufacturers of industrial sewing machines have enjoyed strong sales growth.

Juki (6440.T) rose 2.1 percent after hitting a four-month high and Tsudakoma (6217.T) climbed 1.9 percent, briefly hitting a three-month peak.

(Additional reporting by Hideyuki Sano; Editing by Joseph Radford)