Japan's Nikkei stock average was flat on Friday, with investor jitters over unexpectedly weak

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U.S. data countering a wave of short-covering after recent falls.

Toyota Motor Corp rose 1.5 percent despite a report in the Nikkei business daily that Toyota's North American output in the February-April period will likely fall short of its original target by 20 percent, with relief that president Akio Toyoda's testimony before Congress is over leading to short-covering.

Wall Street edged lower after U.S. January durable goods orders unexpectedly fell and weekly jobless claims jumped, feeding investor anxiety after poor consumer confidence and new home sales data earlier this week.

"Indicators connected with manufacturing are not so bad, but jobs and spending remain poor, and this is making markets rather nervous," said Kenichi Hirano, operating officer at Tachibana Securities.

The benchmark Nikkei was down 1.77 points at 10,100.19 but appeared headed for a loss the month. The broader Topix was flat at 891.14.

Market analysts said activity was likely to be led by trade in futures, with one saying that commodity trading advisers had been seen selling stock futures and buying bond futures on Friday. Another said foreigners who had sold on Thursday were short-covering on Friday, boosting the cash market.

U.S. durable goods orders for January, excluding transportation, slipped 0.6 percent last month, while the number of people filing initial claims for jobless aid rose for a second straight week last week.

Japanese data out before the open showed core consumer prices fell 1.3 percent in the year to the end of January, marking the 11th straight month of annual declines and highlighting the deflationary pressure in the economy.

The pace of fall was unchanged from December as retailers remain under pressure to cut prices to woo more consumers amid falls in wages.

"Deflation in the headline number has eased, but it's only thanks to rising commodity prices and energy, so it's not really a good easing in deflation," said Takuji Okubo, chief economist, global research and strategy, Societe Generale.

"But in core core CPI, deflation is actually worsening. We expect that deterioration to continue further for another few months."

TOYOTA GAINS

Toyota rose to 3,320 yen a day after its president apologised to U.S. lawmakers, cheering investors and setting off short-covering.

"Toyota now has one big hurdle behind it. But it still won't be bought up that much since it may take time to regain trust," said Hirano at Tachibana Securities.

Toyota was not alone in its recall woes, with several other carmakers on Thursday announcing recalls, albeit on a much smaller scale and limited to Japan.

Nissan Motor Co fell 1.4 percent to 698 yen after Japan's third-biggest automaker said it will recall 76,415 cars across 10 models in Japan and 2,281 cars overseas due to a possible defect that may cause engine failure.

Daihatsu Motor fell 0.1 percent to 849 yen after it said it will recall 60,774 units of four minicar models in Japan due to wiring problems that could trigger airbags to inflate accidentally.

But Suzuki Motor, Japan's No. 4 carmaker, rose 0.9 percent to 1,886 yen despite saying in a filing that it will recall 432,366 units of two minicar models in Japan after two reported incidents of fire due to a possible defect in air conditioners.

Shares of Daiichi Sankyo rose 1.5 percent to 1,814 yen after Japan's No. 3 drugmaker said is was considering entering the generic drug market in Japan.

A broad range of defensive shares, which are seen as resilient in the face of uncertainty overseas, also rose.

Cosmetics maker Shiseido gained 1.5 percent to 1,958 yen, personal care products maker Kao Corp rose 0.9 percent to 2,269 yen, and retailer Aeon Co Ltd gained 2.9 percent to 914 yen.