By Elaine Lies TOKYO (Reuters) - Japan's Nikkei average lost 0.3 percent on Thursday as a stronger yen and worry over whether the U.S. auto bailout will be passed by the Senate overcame hopes that economic proposals can keep the global economy from worsening. Komatsu Ltd (6301.T: Quote, Profile, Research, Stock Buzz) and other construction machinery shares climbed, along with shippers, while Honda Motor Corp (7267.T: Quote, Profile, Research, Stock Buzz) soared after the U.S. House of Representatives approved bailout legislation that would shore up Detroit's Big Three for now. But exporters such as Canon Inc (7751.T: Quote, Profile, Research, Stock Buzz) were pressured lower by a slightly stronger yen, while investors moved to take profits on shares of firms reliant on domestic demand such as KDDI Corp (9433.T: Quote, Profile, Research, Stock Buzz) that have helped the Nikkei gain 9.4 percent the past three days. "The market has risen on hope -- hope of infrastructure projects as part of economic packages in the United States and China, and reassurance that the auto bailout has passed the House," said Hideyuki Ishiguro, a supervisor at the investment strategy department of Okasan Securities. "But it also seems that markets have risen too far, given the economic fundamentals, with further rises on expectation alone very hard. And the autos bill has yet to pass the Senate." The U.S. House of Representatives approved bailout legislation that would force automakers to restructure or fail, sending the measure to the Senate, where prospects for passage appeared grim. The benchmark Nikkei .N225 had lost 24.05 points to 8,636.19 and looked set to snap a three-day winning streak that saw it gain more than 700 points by Wednesday. The broader Topix .TOPX was up 0.7 percent at 840.62. Profit-taking hit a wide range of domestic demand shares, with KDDI falling 5.3 percent to 593,000 yen and Fast Retailing (9983.T: Quote, Profile, Research, Stock Buzz) down 2.6 percent at 12,940 yen. Cosmetics and personal care product maker Kao Corp (4452.T: Quote, Profile, Research, Stock Buzz) slid 3.3 percent to 2,620 yen. But such falls were countered by shippers, which extended gains made on Wednesday after a key freight index .BADI rose for the second straight day. Mitsui O.S.K. Lines (9104.T: Quote, Profile, Research, Stock Buzz) powered up by 8.9 percent to 599 yen and Kawasaki Kisen (9107.T: Quote, Profile, Research, Stock Buzz) rose 8.1 percent to 426 yen. Nippon Yusen (9101.T: Quote, Profile, Research, Stock Buzz) gained 7.8 percent to 569 yen. Sumitomo Mitsui Financial Group (8316.T: Quote, Profile, Research, Stock Buzz) climbed 6.4 percent to 332,000 yen after a report that it would raise $7.6 billion in capital, much more than earlier plans. Honda rose 6.9 percent to 2,175 yen and Toyota Motor Co (7203.T: Quote, Profile, Research, Stock Buzz) gained 1.4 percent to 2,970 yen. (Reporting by Elaine Lies; Editing by Michael Watson)

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