Nikkei up 0.4 pct, near 10-mth high on econ optimism

* Nikkei looks towards targets of 10,500, 10,800

* Tech exporters strong on signs of U.S. economic recovery

* Market awaiting Toyota earnings after close

TOKYO, Aug 4 - Japan's Nikkei stock average hovered near a 10-month high on Tuesday, with exporters such as Advantest Corp up after U.S. data underscored optimism that the economy is recovering. Much of the action was driven by earnings, with Astellas Pharma up 3.1 percent after the drugmaker reported relatively firm April-June results thanks to solid sales of its mainstay drugs, while Suzuki Motor slid after posting an 80 percent drop in quarterly operating profit.

The Nikkei pulled back slightly from an earlier high of 10,479.19 on what analysts said was a natural reaction to rises that have seen it gain more than 3 percent in the last week, with the market awaiting Toyota Motor Corp earnings out after the bell and U.S. employment data on Friday.

"We're seeing a lot of positive factors -- good U.S. indicators and solid Japanese earnings, both of which are boosting the Nikkei. But right now we're also seeing a bit of natural reaction to these rises," said Masayuki Kubota, a senior fund manager at Daiwa SB Investments.

The benchmark Nikkei was up 0.4 percent or 41.53 points at 10,394.00 after earlier rising as high as 10,479.19, its highest since Oct. 6, but still on track for a 10-month closing high.

Analysts said the next targets were likely to be the psychologically important 10,500 level and then 10,800 -- around the 50 percent Fibonacci retracement of its fall from a June 2008 high near 14,500 to a 26-year-low just under 7,000 last October.

The broader Topix rose 0.1 percent to 958.72.

U.S. stocks rose on Monday, pushing the S&P 500 index above 1,000 for the first time in nine months, after the Institute for Supply Management said its index of national factory activity rose to 48.9 in July, the highest since August 2008. The figure was higher than analysts had expected.

Separately, a survey showed on Monday that global factory business activity stabilised in July as new orders and output recovered to levels not seen in well over a year.

Analysts said that for markets to push higher, further strong signs of improvement in the global economy are needed.

"Certainly we've seen a lot of good earnings, but much of this is due to cost-cutting and various government incentives, and demand itself has yet to really recover," said Takashi Ushio, head of the investment strategy division at Marusan Securities.

"There's a slightly breathless sense to the gains at this point and we really need to see the U.S. jobs data."

The U.S. economy is expected to have lost 320,000 nonfarm payroll jobs in July, a hefty number but still an improvement over last month's drop of 467,000. The unemployment rate is expected to rise to 9.6 percent.

High-tech exporters rose, with chip-tester maker Advantest jumping 4.3 percent to 2,165 yen and Tokyo Electron up 2.5 percent to 4,960 yen.

Astellas, the No.2 Japanese drugmaker, advanced to 3,720 yen. The drugmaker kept its earnings targets unchanged.