Nikkei up 1 pct but off highs, steelmakers surge

* Nikkei pares gains, pre-weekend nerves spark selling

* Steelmakers jump on smaller-than-expected steel price cut

* High techs still firm in wake of Google earnings

* Yen's gains against euro, dollar weigh slightly

TOKYO, April 17 - Japan's Nikkei stock average rose 1.2 percent on Friday but was off earlier highs as the yen gained against the euro, though steelmakers surged after Nippon Steel negotiated a smaller-than-expected price cut with Toyota Motor Corp.

Sony Corp and other high-tech shares also jumped after Google Inc's quarterly profit topped expectations and world's top cellphone maker Nokia said it saw signs of stabilising demand.

But market analysts said investors jittery ahead of Citigroup results later in the day seized on the yen's gains against the euro as a reason to sell, with slightly thinner volume exaggerating moves.

The euro fell to its lowest in a month against the dollar, and slipped nearly 1 percent against the yen, after ECB President Jean-Claude Trichet said he appreciated U.S. comments that a strong dollar was in its interests. "We're out of the worst period now but we've yet to enter a period of real recovery, so the market's taking a bit of a breather right now," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

"Everybody now expects the Citigroup results to be better than predicted, the way others were, so if they're even a little bit bad we could see selling."

JPMorgan's results on Thursday beat analysts' expectations as debt trading and underwriting revenue surged, fuelling hopes that the banking sector is stabilising.

That added to a string of encouraging results from other banks, including Wells Fargo's strong preliminary figures last week.

The benchmark Nikkei rose 103.98 points to 8,864.06 after earlier climbing more than 2 percent, while the broader Topix rose 1.2 percent to 841.95.

Japanese steelmakers led by the world No.2, Nippon Steel Corp, agreed with Toyota Motor Corp to cut steel prices around 10 percent, a source said, a smaller cut than expected that signals steel mills' earnings may not suffer too much.

Nippon Steel Co surged 8.3 percent to 339 yen, while JFE Holdings shot up 9.4 percent to 2,945 yen and Kobe Steel climbed 6.8 percent to 173 yen.

Exporters rose after Google's results, though Chief Executive Eric Schmidt said the economic environment remains tough with users still searching but buying less.

Sony rose 5.3 percent to 2,575 yen and Sharp Corp climbed 8.8 percent to 979 yen. Toyota climbed 3.2 percent to 3,830 yen.