* Automakers fall, cut to "sell" by Citigroup
* Nikkei to trade between 9,500-9,800 this week -analyst
* Tokyo Elec surges, reconstruction-related stocks higher
By Ayai Tomisawa
TOKYO, April 11 (Reuters) - Japan's Nikkei benchmark edged lower on Monday after Citigroup slashed its ratings on major automakers to "sell" although buying of reconstruction-related stocks supported the market.
The index has recouped about two-thirds of the ground it lost since the March 11 earthquake and tsunami, and on Friday finished above its closely watched 25-day moving average for the first time since March 4.
But analysts say further significant gains could be hard won and technical charts are indicating a near-term downward trend, analysts said.
"When the Nikkei nears 9,800, profit-taking could hit. It's too early to chase the market higher," said Hiroichi Nishi, general manager at SMBC Nikko Securities.
The benchmark Nikkei fell 0.3 percent or 32.01 points to 9,736.07. The broader Topix was flat at 853.10.
Analysts said the Nikkei benchmark is expected to trade between 9,500-9,800 this week although first-quarter U.S. corporate earnings might change that.
"If such companies as Alcoa cheer the market and provide evidence of a U.S. economic recovery, the Nikkei may top that range," said Yumi Nishimura, a senior market analyst at Daiwa Securities.
Aluminum company Alcoa Inc is scheduled to report first-quarter earnings on Monday, and others reporting this week include JPMorgan Chase & Co , Bank of America Corp and Google Inc .
Among automakers, Toyota Motor Corp fell 2.1 percent to 3,270 yen after it was cut to "sell" from "neutral" and its target share price slashed to 2,440 yen from 4,140 yen, according to the Citigroup report obtained by Reuters.
"We do not think the fall in earnings and slowness of the recovery have been fully priced in yet," analyst Noriyuki Matsushima wrote.
Nissan Motor Co dropped 1.8 percent to 701 yen after being cut to "sell" from "buy" and its target share price was almost halved to 650 yen. Honda shed 2.1 percent to 2,908 yen after being downgraded to "sell" from "buy". Its target share price was also nearly halved, to 2,470 yen.
Japan's top automakers plan to resume production at all domestic factories in stages starting on Monday, but output levels will be at half of original plans and depend on the availability of parts and power.[ID:nN08212730]
Sharp Corp fell 1.2 percent to 768 yen after the firm said it expects to keep production suspended at two Japan liquid crystal display (LCD) panel factories until early May amid unstable supplies of industrial gas. [ID:nL3E7FA0FE]
Shares of Tokyo Electric Power Co surged 13 percent to 475 yen, adding to a 24 percent surge on Friday in a rally triggered in part by Mizuho Securities reiterating its "outperform" rating on the battered stock. [ID:nL3E7F80O5]
Reconstruction-related stocks climbed, with contractor Kajima Corp gaining 2.6 percent to 233 yen and Shimizu Corp advancing 1.4 percent to 359 yen.
Electronics conglomerate Toshiba Corp rose 4.2 percent to 402 yen, after analysts at Deutsche Bank and MF Global said negative sentiment surrounding the company's nuclear business, triggered by the crisis at the Fukushima nuclear plant, had gone too far.
Earnings from NAND flash memory chips used in smartphones and tablets are expected to remain healthy, both analysts said. (Additional reporting by Antoni Slodkowski; Editing by Edwina Gibbs)
Nikkei edges lower, autos sold on Citigroup downgrade
