TOKYO, June 5 (Reuters) - Japanese shares slipped on

Thursday as weak U.S. economic data stoked caution toward the

outlook of the world's largest economy, while a stronger yen

hurt automakers.

At 0134 GMT, the Nikkei was down 0.1% at 37,704.91,

having trimmed most of a decline of 0.6% earlier in the session.

The broader Topix was down 0.64% at 2,627.17.

Overnight, U.S. data showed the smallest gain in private

payrolls since March 2023 while the service sector contracted

for the first time in about a year.

"The market had not expected to see the weak data out of the

U.S., so now investors have become cautious about Friday's

employment report," said Shuutarou Yasuda, a market analyst at

Tokai Tokyo Intelligence Laboratory.

"But the weak economic data means the Federal Reserve may

lower interest rates, which is positive for equities. So

investors do not have to switch to risk-off mode," Yasuda said.

The U.S. dollar weakened across the board overnight, sending

the yen as high as 142.6. The yen was last down 0.1%

at 142.89.

A stronger Japanese currency tends to hurt shares of

exporters, as it decreases the value of overseas profit in yen

terms when repatriated to Japan.

Automakers fell, with Toyota Motor ( TM ) and Honda Motor ( HMC )

slipping 1.87% and 1.44%, respectively.

Overall, automakers and auto parts makers fell

3.8%.

Bank shares fell as U.S. Treasury yields declined overnight,

with Mitsubishi UFJ Financial Group ( MUFG ) and Sumitomo Mitsui

Financial Group ( SMFG ) slipping 1.3% and 1.4%.

Chip-related heavyweights rose to track overnight gains in

the technology-heavy Nasdaq Composite.

Advantest ( ADTTF ) surged 5% and Tokyo Electron ( TOELF )

rose 3.3%, providing the biggest support to the Nikkei.

Of more than 1,600 stocks trading on the Tokyo Stock

Exchange's prime market, 45% rose, 50% fell and 3% were flat.