* Nikkei has risen 3.4 pct for the week
* Poor U.S. monthly auto sales hits automakers
By Ayai Tomisawa
TOKYO, Sept 2 (Reuters) - Japan's Nikkei share average edged down on Friday morning after sluggish U.S. factory activity data soured sentiment, while investors continued to stay cautious before the release of a key U.S. jobs report later in the day.
The Nikkei fell 0.1 percent to 16,913.15 in midmorning trade, after rising to a three-month high at the closing level on the previous day. For the week, the benchmark index has gained 3.4 percent.
A report from the Institute of Supply Management (ISM) on Thursday showed U.S. factory activity contracted for the first time in six months in August as new orders and production tumbled.
Given the weak ISM manufacturing report, investors will look to U.S. payrolls data which could influence the U.S. Federal Reserve's decision on the timing of the next interest rate hike.
"Some market participants had betted that the Fed may raise a U.S. rate as early as this month, but because of the weak ISM data and poor U.S. auto sales, such expectations seemed to have changed," said Hikaru Sato, a senior technical analyst at Daiwa Securities.
"The U.S. is moving towards tightening, and that direction is the same, but the dollar-yen moves also show that people stepped back from expectations for an imminent hike."
On Friday, the dollar was flat at 103.36 yen after coming down from a one-month high of 104.00 overnight.
Automakers lost ground on Friday after U.S. auto sales fell 4.2 percent in August as some major automakers said a long-expected decline due to softer consumer demand had begun.
Toyota Motor Corp dropped 0.7 percent, Honda Motor Co shed 1.3 percent and Mazda Motor Corp fell 1.7 percent.
Such defensive stocks as food processors and drugmakers attracted buying. Ajinomoto Co rose 0.9 percent and Astellas Pharma Inc gained 1.9 percent.
The broader Topix gained 0.2 percent to 1,339.33 and the JPX-Nikkei Index 400 rose 0.1 percent to 12,043.38.
Editing by SImon Cameron-Moore