* Sources say Panasonic to sell 3 Japan chip plants, stock

up

* Rakuten jumps after being promoted to main board Topix

By Dominic Lau

TOKYO, Nov 27 (Reuters) - Japan's Nikkei share average edged

lower on Wednesday on profit-taking, peeling further away from a

six-month high, though traders said investors were looking for

opportunities to pick up bargains.

Nikon Corp, Ricoh Co Ltd and Canon Inc

were in demand, up between 0.8 and 3.1 percent after

U.S. Hewlett-Packard Co beat revenue forecasts.

Nikon is down 23.6 percent year-to-date and is the worst

underperformer in the Nikkei this year, while the benchmark has

rallied nearly 49 percent.

The Nikkei shed 0.4 percent to 15,461.20 in

mid-morning trade on Wednesday, easing further away from a

six-month high hit on Monday.

"The market itself is a little bit down today, but still

people are looking for opportunities on the long side," a

Tokyo-based sales trader said.

"Now that the earnings are over, people are looking for

growth scenarios," he added, referring to the company earnings

reporting season.

Panasonic Corp rose 3 percent to a near three-year

high after sources said the consumer electronics maker will sell

three semiconductor plants in Japan to Israeli chipmaker

TowerJazz, bringing it closer to completing the

overhaul of its loss-making businesses.

The sources also said Panasonic is in talks with another

company to sell its five overseas chip factories.

Rakuten Inc jumped 10.2 percent after the Tokyo

Stock Exchange said the e-commerce operator will be promoted to

the main board Topix from Jasdaq for emerging

companies, starting Dec. 3.

Currency-sensitive exporters came under pressure as the yen

came off a six-month low against the dollar overnight.

Honda Motor Co Ltd, Mazda Motor Corp, Fuji

Heavy Industries Ltd and Daikin Industries Ltd

were off between 0.4 and 2.4 percent.

As of Tuesday's close, Mazda Motor and Fuji Heavy Industries

were the second- and third-best performers in the Nikkei this

year, with gains of about 160 percent.

Mobile operator SoftBank Corp was the best

performer, though the stock was down 2 percent on profit-taking

on Wednesday morning.

A senior trader from a U.S. bank in Tokyo said he did not

expect massive profit-taking in the next few days as November

tends to be the year-end for many hedge funds.

"Hedge funds have made good money this year and that those

who were planning on getting quieter towards the year-end have

already reduced their positions," he said.

Underscoring the positive momentum, the pace of

deterioration in Topix's one-month earning momentum slowed to

-0.65 this month from -1.83 in October.