TOKYO, Feb 4 (Reuters) - The benchmark Nikkei average fell 0.5 percent and the broader Topix lost 0.7 percent on Thursday.

The following stocks were on the move:

**JGC, EBARA HIGHER AFTER NIKKEI REPORT ON WATER BUSINESS**

Pump maker Ebara Corp climbed 2 percent to 400 yen and engineering firm JGC Corp gained 0.7 percent to 1,744 yen after the Nikkei business daily reported that the two firms and trading company Mitsubishi Corp will link up in a water-treatment business.

Mitsubishi's stock fell 2.6 percent to 2,192 yen.

The paper said Mitsubishi and JGC will each take a 33.3 percent stake in Ebara's domestic water service unit in April. They aim to win large water supply and sewage treatment contracts in emerging economies, the paper said.

Mitsubishi said no decision had been made on the issue.

0150GMT

**DAINIPPON SUMITOMO PHARMA FALLS AFTER CITIGROUP DOWNGRADE**

Dainippon Sumitomo Pharma fell 6.1 percent to 963 yen after Citigroup downgraded it to 'sell/medium risk' from 'hold/medium risk', citing higher-than-expected book asset valuation costs related to its acquisition of U.S. drugmaker Sepracor.

0112 GMT

**HONDA CLIMBS AFTER LIFTING ANNUAL GUIDANCE**

Honda Motor Co gained 2.9 percent to 3,230 yen after it raised annual guidance far beyond market expectations, with cost cuts driving a jump in quarterly profit, and said it anticipates further growth next financial year.

0047 GMT

**SHARP CORP FALLS AFTER Q3 EARNINGS DISAPPOINT**

Sharp shares fell 4.2 percent to 1,084 yen after the company reported a smaller-than-expected quarterly profit reflecting start-up costs at its new display panel plant but forecast tight LCD supply for 2010, raising hopes for a further earnings recovery.

Operating profit at Sharp was 21 billion yen ($233 million) in the three months from October to December. That was up from a 15.86 billion yen loss a year earlier but fell short of a consensus for a 27.5 billion yen profit in a poll of 5 analysts by Thomson Reuters I/B/E/S.

0032 GMT

**TOYOTA EXTENDS LOSSES AS U.S. STEPS UP PRESSURE ON RECALL**

Toyota Motor Corp fell 3.8 percent to 3,270 yen, extending losses as the Obama administration stepped up the pressure on the world's largest automaker to address a range of safety issues as investors bolted at signs of a deepening crisis.

0015 GMT

(Reporting by Tokyo newsroom)

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