By Joshua Hunt

Oct 2 (Reuters) - Japanese stocks remained basically flat amid profit-taking and re-allocation during choppy trade on Friday morning as investors looked ahead to a key U.S. jobs report.

The Nikkei share average edged up 0.02 percent to 17,725.98 during the morning session.

Japan's retail sector outperformed after fresh data showed Japan's household spending rose in August for the first time in three months and that job availability improved to its best in more than two decades.

Market players said the tight labour market and increased household spending could ease recent fears of a recession.

"We've been on the lookout for growing consumption so it's really good to see such a strong number in the household survey," said Nicholas Smith, a strategist at CLSA.

"Conditions for making money in Japan are good, it's the rest of the world that scares me. When a panic hits it's Japanese shares that get dumped because the market is so liquid compared to the rest of Asia."

ABC Mart shares climbed 2.8 percent after the Nikkei business daily reported the shoe retailer likely booked a record first-half operating profit of just under 24 billion yen ($200 million) for the six months through August.

Shares in makers of tyres and automobiles outperformed as automakers reported a 15.8 percent rise in U.S. sales in September.

Toyota Motor Corp and Nissan Motor Co each gained 1 percent while tyre maker Bridgestone Corp climbed 2.4 percent.

The broader Topix edged down 0.02 percent to 1,442.45 and the JPX-Nikkei Index 400 fell 0.08 percent to 12,908.15.

($1 = 120.0200 yen) (Reporting by Joshua Hunt; Editing by Eric Meijer)