TOKYO, Aug 29 (Reuters) - Japan's Nikkei share average

fell on Friday as August's rally invited profit taking on the

final trading day of the month, while a stronger yen and some

weak economic readings also weighed on sentiment.

The tech-heavy Nikkei dropped 0.4% to 42,642.97 as

of the midday break.

That put it on course to be flat for the week, but up 3.8%

this month. The index hit a record high of 43,876.42 on Tuesday

of last week.

Meanwhile, the broader Topix sank 0.5% to 3,073.95,

putting it down 0.9% for the week, but up 4.5% this month, when

it also climbed to an all-time peak.

Japanese stocks have been buoyed in recent weeks by robust

corporate earnings, as well as riding the global equities

momentum spurred by Wall Street's record run.

"This is an environment that is conducive to profit taking

in Japanese stocks," said Nomura strategist Maki Sawada,

pointing to the strong gains for August and Friday being the

final trading day of the month.

The bullish outlook from strong corporate earnings "hasn't

changed, and will continue to support the Nikkei" into

September, she said.

Figures on Friday showed factory output fell more than

expected last month, while retail sales rose only slightly,

falling short of forecasts.

Automakers were overall weaker as the yen's gains against

the dollar overnight reduced the value of overseas revenues.

Toyota ( TM ) lost 1.5% and Honda ( HMC ) eased 1.2%.

Chip-sector shares also declined, with Tokyo Electron ( TOELF )

sliding 1.5%.

Sony ( SONY ) sank 1.8% and Nintendo ( NTDOF ) dropped 1.3%.

Of the Nikkei's 225 components, 147 fell versus 77 that

rose, with one trading flat.