* Sony jumps on Citigroup upgrade * Nintendo leaps in catch-up with rally, but gains may be limited * Advantest sags on report of disappointing earnings By Sophie Knight TOKYO, Jan 28 (Reuters) - Japan's Nikkei share average breached the 11,000-point level at Monday's open to a fresh 32-month high after the yen dropped sharply over the weekend, but it pulled back to be down by mid-morning as investors awaited local earnings for further cues. The benchmark edged down 0.3 percent to 10,890.04 after striking 11,002.86 on bumper foreign orders after the yen dropped to 91 versus the dollar on Friday, spurring interest in Japanese exporters whose overseas revenues are set to expand once repatriated. Among those seeing fat gains was Sony Corp, which jumped 5.9 percent after Citigroup raised its rating to "buy" from "neutral", saying the softer yen has enabled Sony to take more risks on operations such as the home appliance business. "The potent mix of 'Abenomics' and strong risk appetite abroad is continuing to soften the yen, which means investors are still buying stocks," said Masayuki Doshida, senior market analyst at Rakuten Securities. A positive earnings season in the United States, where 68 percent of the 147 S&P companies that have reported earnings so far have beaten expectations - above the 62 average since 1994 - was helping to bolster sentiment, Doshida said. "However, it may be difficult for investors to move before they see how much the weaker yen will improve Japanese companies' performance," Doshida said. "The benchmark faces resistance around the 11,000 level." With Japan's earnings season getting into full swing this week, investors are hoping that the yen's more than 10 percent fall against the dollar in the past two months will improve Japanese companies' forecasts in the year to come. But the yen effect may not be enough to offset slowing demand in China, exacerbated by a diplomatic spat that chilled interest in Japanese products, as well as an ongoing EU debt crisis that has severely crimped consumption in the region. Industrial robots maker Fanuc Ltd, which fell 4.9 percent on Monday morning, cited both of those reasons when it cut its operating forecast for the year ending March by almost 20 percent to 178 billion yen ($2 billion) after the bell on Friday. Fanuc also said its operating profit for the nine months ended December had dropped 13.4 percent from the previous year, hurt by a yen that remained strong for much of that year, although it changed its exchange rate assumption to 85 yen to the dollar from a previous forecast of 78. "We've got big tests in the coming week like Fanuc coming out with weak numbers, and I don't think the judgment is over on that yet. Four percent down is not a shock," said Stefan Worrall, director of equity cash sales at Credit Suisse. "It does matter if euphoria has got ahead of itself. A lot of these stocks have already ripped on a pretty bullish macro outlook," Worrall added. Advantest Corp shed 5 percent after the Nikkei business daily said the chipmaker's operating profit for the year ending March was expected to undershoot expectations as it likely suffered an operating loss of 2 billion yen ($22 million) in the last quarter due to slowing iPhone 5 sales. Some shares, however, are starting to see gains after being left behind in a rally that began in mid-November, when then-incoming leader Shinzo Abe began calling for a weaker yen and aggressive monetary easing to reinvigorate the Japanese economy. A case in point is Nintendo Co Ltd which leapt 5.5 percent on Monday morning, but the stock is still 10.5 percent below its level in mid-November, while the Nikkei has gained 25 percent and logged 11 straight weekly gains since then. "If the yen goes from 100 yen to the euro to 122 yen and the dollar from 75 to 90, then this thing must move. This thing hasn't moved at all. People are just playing the FX at the moment. It is a catch-up," a trader who declined to be named said. "I would expect people taking profit very soon," he said, adding that the move would be over on Tuesday as the fundamentals of the company had not changed. The broader Topix was flat at 917.20 by mid-morning.