* Nikkei retreats from 3-month highs on profit-taking
* Mothers, Jasdaq markets attract buyers
By Ayai Tomisawa
TOKYO, Aug 30 (Reuters) - Japan's Nikkei eked out small gains after touching more than a three-month high on Thursday as positive developments in trade negotiations underpinned sentiment, but investors wasted no time taking profits from the gains in late trade.
The Nikkei share average ended 0.1 percent higher to 22,869.50, after climbing to 23,032.17 points, its highest level since May 21.
Meanwhile, start-up markets attracted buying, with the Mother market rising 1 percent and the Jasdaq market advanced 0.5 percent.
On Wednesday, the leaders of the United States and Canada expressed optimism that they could reach a new North American trade deal by a Friday deadline, although Canada warned that a number of tricky issues remained.
Analysts said the NAFTA talks boosted the appetite for riskier assets, including Japanese stocks. However, with the Nikkei trading above its psychologically important level of 23,000 this week, profit-taking could kick in.
"Investors are cheering the developments. But they are not overly optimistic because while the market is focusing on North American trade issues now, they haven't forgotten about China-U.S. trade worries," said Isao Kubo, an equity strategist at Nissay Asset Management.
The broader Topix ended flat at 1,739.14.
Index heavyweight stocks led the gains, with Fast Retailing , an operator of Uniqlo clothing stores, up 0.8 percent and SoftBank Group Corp adding 0.9 percent. The two stocks contributed a hefty 25 points to the Nikkei benchmark index.
The mining sector was the second biggest gainer on the board after oil prices extended their rally on Thursday on a fall in U.S. crude inventories and expected disruptions to supply from Iran and Venezuela. Inpex Corp surged 1.5 percent.
Reporting by Ayai Tomisawa; Editing by Simon Cameron-Moore