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TOKYO, Jan 29 (Reuters) - Japan's Nikkei share average is set to extend losses through Tuesday on profit-taking as the index hovers near a 32-month high, as a firmer yen tempers appetite for exporters and investors turn their attention to upcoming earnings. Market participants said the Nikkei was likely to trade between 10,700 to 10,900 on Tuesday after Nikkei futures in Chicago closed at 10,780, down 0.3 percent from the close in Osaka of 10,810. "The two factors to watch now are whether foreign investors, who drove the recent rally, remain bullish and continue buying, and whether retail investors continue to buy into emerging stocks that are relatively immune to the exchange rate," said Yoshihiro Ito, chief strategist at Okasan Online Securities. The Nikkei has gained around 25 percent since mid-November, when Shinzo Abe, then a candidate for leader of the opposition and now Prime Minister, began calling for aggressive monetary easing, fiscal expansion and a 2 percent inflation target. Foreign investors scrambled to buy exporters as Abe's demands helped weaken the yen by almost 10 percent against the dollar over that period, improving their overseas revenues. However, analysts say the yen's slide may be slowing down, putting a brake on the Nikkei's upward swing. The benchmark dropped 0.9 percent to 10,824.31 on Monday after touching on tough resistance at 11,000, which it touched for the first time in 32 months. Despite the recent rally, the benchmark remains well below the 2008 financial crisis while the S&P 500 Index and Germany's benchmark stock index have both already exceeded that level. The S&P 500 snapped eight straight days of gains on Monday, with U.S. stocks flat overall. Caterpillar posted a 55 percent drop in quarterly profit, hurt by weak demand, which could pressure Japanese construction machinery makers today. However, its stock rose 2 percent after falling 2.2 percent in the last three sessions. > S&P 500 eases, ends longest winning run in 8 years > Dollar slips from 2-1/2-year peak vs yen; euro lower > Prices ease as durable orders rise, supply looms > Platinum down 1.2 pct as Amplats delays job cuts > Oil rises as Hess refinery closure boosts gasoline STOCKS TO WATCH - KDDI CORP Mobile phone operator KDDI hiked its full-year operating profit forecast for the year ending March 31 by 1 percent to 505 billion yen ($5.57 billion) as contracts for smartphones such as Apple Inc's iPhones have increased faster than expected. -NTT DOCOMO INC NTT DoCoMo, the only one of Japan's top three mobile phone carriers to not offer the iPhone, is likely to post 9 percent drop in operating profit to 675 billion yen for the three quarters ended December 31, the Nikkei business daily said, due to increased spending on promotions. -HINO MOTORS LTD Hino Motors is likely to have more than doubled its operating profit for the nine months ended Dec. 31 to a record 43 billion yen ($474 million) thanks to strong truck sales, the Nikkei newspaper said. -SUMITOMO MITSUI FINANCIAL GROUP, MITSUI FINANCIAL GROUP INC, MITSUBISHI UFJ FINANCIAL GROUP INC Japan's top three megabanks will see bumper profits this year, the Nikkei newspaper said, with Sumitomo potentially beating its 2005 record net profit of more than 500 billion yen ($5.52 billion) and Mizuho likely posting a 50 percent increase to 400 billion yen. The Nikkei said Mitsubishi UFJ was likely to post a net profit of 400 billion yen, a 40 percent decrease from the previous year, due to a one-time gain of 290 billion yen last year from adding Morgan Stanley to its consolidated statements.