* Moody's cut gives opposition party a chance to attack Abe's policy - analyst * Weak yen supports sentiment * GS Yuasa dives after U.S. officials said its battery had design flaws By Ayai Tomisawa TOKYO, Dec 2 (Reuters) - Japan's Nikkei share average slipped on Tuesday as investors took profits from the recent gains after Moody's Investors Service cut the country's sovereign debt rating, but losses were limited as the weak yen supported sentiment.

The Nikkei dropped 0.2 percent to 17,550.78 points by mid-morning, pulling away from a seven-year high of 17,649.02 hit on the previous day.

Index heavyweight stocks such as SoftBank Corp, Fast Retaling Co and Fanuc Corp lost ground, falling between 0.6-1.8 percent.

GS Yuasa Corp tumbled 3.2 percent in heavy volume after the U.S. National Transportation Safety Board said that the company's lithium-ion battery that caught fire aboard a Boeing 787 in 2013 had design flaws.

Moody's Investors Service on Monday downgraded Japan's sovereign debt rating by one notch to A1, citing rising uncertainty over the country's ability to hit its debt-reduction goal.

Traders said that the downgrade itself has limited negative impact to the overall market in the short-term as the weak yen should support Japanese shares, but the timing of the downgrade may serve as a headwind to Prime Minister Shinzo Abe before the election.

"The downgrade came as the election campaign officially started, so the timing was bad," said Kyoya Okazawa, head of global equities and commodity derivatives at BNP Paribas.

"It gave the opposition parties a chance to attack his policies, attack Abe that Abenomics isn't working." He said that for the next two weeks until the election, the market may be swayed by headlines related to the election, but the market should be supported as long as the yen stays weak.

The dollar traded at 118.33 yen, having hit a seven-year peak of 119.15 yen after Moody's cut Japan's sovereign ratings.

Exporters bucked the weakness, with Toyota Motor Corp gaining 0.6 percent and Honda Motor Co rising 0.9 percent.

The broader Topix shed 0.1 percent to 1,420, and the new JPX-Nikkei Index 400 declined 0.1 percent to 12,918.62.

(Editing by Kim Coghill)