* Nikkei slips 0.8 pct and Topix down 0.9 pct * Nikkei has rallied nearly 8 pct over past two weeks * DeNA gains after Morgan Stanley MUFG raises price target By Dominic Lau TOKYO, Nov 28 (Reuters) - Japan's Nikkei average shed 0.8 percent on Wednesday, on track to end a four-day winning streak on jitters about an apparent lack of progress in the U.S. fiscal policy standoff. The Nikkei has rallied nearly 8 percent over the past two weeks, as the yen has weakened sharply on expectations main opposition leader Shinzo Abe will win a Dec. 16 election and increase pressure on the central bank to reverse the country's persistent deflation. But shares of exporters, the main beneficiaries of the weaker yen, have started to succumb to profit-taking. "The Abe trade is probably over," a dealer at a foreign bank said. "The yen was triggering a lot of buying. People shifted out of domestic into FX-sensitive names. That trade is almost over as the FX is stalling at around 82 (yen to the dollar)." By the midday break, the Nikkei was down 79.37 points at 9,343.93 after hitting a seven-month closing high on Tuesday. It is up 10.5 percent this year, trailing an 11.2 percent rise in the U.S. S&P 500 and an 11.6 percent gain in the pan-European STOXX Europe 600 index. Comments by U.S. Senate Majority Leader Harry Reid on Tuesday over the lack of progress among Democratic and Republican lawmakers to reach a deal to avoid a year-end 'fiscal cliff' helped trigger profit-taking on the Nikkei. Exporters losing ground included Canon Inc, Honda Motor Co, chip measuring instruments maker Advantest Corp and TDK Corp, down between 1.3 and 3.2 percent. "The current situation is based on expectations that Japan may change under the next government," said Hisao Matsuura, equity strategist at Nomura Securities, noting that the market is still subject to short-term fluctuations. "We can expect a steady rise after (the election)," he said, adding that Nomura had a year-end Nikkei target of 9,500, 1.7 percent above where the index ended the morning session. Abe has urged the Bank of Japan to take more extreme monetary easing steps, weakening the yen to a 7-1/2-month low of 82.84 against the greenback on Nov. 22. The Japanese currency was quoted at 81.89 yen to the dollar on Wednesday. TO CHASE OR NOT TO CHASE? The trader said investors were facing a dilemma whether to chase the market higher or move back into defensive stocks, which are less impacted by slowing global growth. He nominated medical equipment maker Nihon Kohden Corp , up 1 percent, as one firm with defensive qualities as well as robust growth potential. Notable gainers included social gaming company DeNA Co Ltd , a widely held stock, which climbed 1.7 percent after Morgan Stanley MUFG lifted its price target, citing strong overseas growth potential. The brokerage, however, cut the price target of DeNA rival, Gree Inc. The stock lost 1.4 percent. The broader Topix fell 0.9 percent to 774.96 in relatively active trade, with volume at 55 percent of its full daily average for the past 90 trading days. In terms of valuations, Japanese stocks carry a 12-month forward price-to-earnings of 11.3, cheaper than the S&P 500's 12.1 but slightly more expensive than the STOXX Europe 600's 11, data from Thomson Reuters Datastream showed.