* Nikkei may head into 7-day loss * Hitachi Cable up on merger report * Construction shares lower on outlook cuts By Ayai Tomisawa TOKYO, Nov 13 Japan's Nikkei share average eased on Tuesday, giving up earlier gains, and may end lower for a seventh consecutive day as investors worry that a U.S. fiscal policy standoff could push the country into recession. By the midday break, the Nikkei dropped 0.3 percent to 8,647.28 Points, and the broader Topix shed 0.3 percent to 720.27. "Investors are risk averse as they worry that issues about the U.S. fiscal cliff may not reach a conclusion soon," said Eiji Kinouchi, chief technical analyst at Daiwa Securities. "While investors are looking for trading cues, U.S. futures are trading lower, and it's difficult to hold their sentiment positive." S&P 500 futures traded 0.4 percent lower. The U.S. "fiscal cliff" - a series of budget cuts and tax hikes that will start to go into effect in the new year - have made investors cautious because of the potential for harm to U.S. and global economic growth. Amid a global fright over Washington's political brinkmanship, U.S. lawmakers return to the capital on Tuesday with a seven-week deadline to reach agreement on scheduled tax hikes and budget cuts. Market players in Tokyo said that the Nikkei may end lower for a seventh straight session on Tuesday, but drops may be limited, with a technical support level seen at 8,635. "The Nikkei's once-support lines have become its resistance lines now," said Kenichi Hirano, a strategist at Tachibana Securities, adding that investors may chase the market higher for the next few days to cover their short positions, but stay on the sidelines when the Nikkei nears 8,850. Its 25-day moving average is at 8,851, while its 75-day moving average is at 8,897. "But at the same time, there are signs that the U.S. economy is recovering, and if upcoming U.S. data gives hope to the market we may see more rises as the underlying worries are whether the U.S. economy is recovering or not," said Takashi Ito, equity market strategist at Nomura Securities. He said that fiscal problems in Europe were seen as more serious, as they will only be solved in the long term. "As long as Greece's default can be stopped, the market may not react too wildly. Greece's problem is like a disease which cannot be cured right away but needs to be monitored not to get worse." Euro zone finance ministers gathered in Brussels did not agree to disburse more money to Greece on Monday, as expected. The euro zone and the International Monetary Fund clashed over a longer-term target date to shrink the country's debt pile, but Greece's international lenders agreed to give the country two more years to make the cuts demanded of it. European Union officials said euro zone finance ministers will meet again on Nov. 20 to discuss Greece. The benchmark Nikkei is up 2.3 percent this year, trailing a 9.7 percent gain in the U.S. S&P 500 and a 10.2 percent rise in the pan-European STOXX Europe 600. Japanese equities carry a 12-month forward price-to-book ratio of 0.83, much cheaper than the S&P 500's 1.9 and STOXX Europe 600's 1.38, data from Thomson Reuters Datastream showed. Hitachi Cable Ltd jumped 18 percent to 126 yen, hitting a three-month high after a source told Reuters that it and Hitachi Metals Ltd plan to merge in April, creating a materials producer with businesses ranging from automotive and electronic parts to fibre optics. Construction shares were lower, with Shimizu Corp shedding 5.4 percent to 226 yen, hitting a 12-year low after the general contractor cut its annual operating profit forecast by one-third to 14.5 billion yen, citing higher than expected project costs and slower-than-expected improvement in margins. Taisei Corp dropped 3.4 percent to 201 yen after the contractor cut its full-year net profit outlook for the year ending March.
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