* Nikkei edges up but gains capped by stronger yen

* Strong machinery data give machinery shares a small lift

TOKYO, Nov 11 (Reuters) - Japan's Nikkei stock average edged up 0.6 percent on Wednesday, helped by a surprisingly large jump in domestic machinery orders for September and after manufacturers forecast a rise in the fourth quarter.

But the yen's advance against the dollar limited gains, with some chip-related firms such as Advantest Corp (6857.T: Quote, Profile, Research) slipping after climbing the previous day. Core machinery orders, highly volatile series regarded as an indicator of capital spending in September, surged 10.5 percent and manufacturers forecast a rise of 1.0 percent in October-December, the first quarterly increase in seven quarters. [JPMORD=ECI] But analysts remained wary.

"This index is highly volatile and I'm not sure how many investors really rely on it as an indicator," said Hiroaki Osakabe, a fund manager at Chibagin Asset Management.

"Basically, expectations for economic growth in Japan are quite low compared to the rest of the world and Asia especially, and Japanese stocks just aren't rising as a result."

The benchmark Nikkei .N225 gained 54.40 points to 9,925.13, while the broader Topix .TOPX -- a less tech-heavy index -- rose 0.5 percent to 876.82.

"Machinery orders may be bottoming out, but this does not mean that this 1.0 percent will now grow to 3.0 percent and then to 10 percent," said Junko Nishioka, chief economist at RBS Securities.

"Companies are still suffering from excess capacity, and the strong yen and a slow recovery in U.S. demand are still dragging on overall corporate activity.