* Nikkei touches 23,000 again, highest since May
* Market susceptible to profit-taking - analyst
By Ayai Tomisawa
TOKYO, Aug 30 (Reuters) - Japan's Nikkei rose to more than a three-month high on Thursday after U.S. stocks extended gains as positive developments in trade negotiations underpinned sentiment, while index-heavy stocks such as Fanuc and Fast Retailing advanced.
The Nikkei share average gained 0.6 percent to 22,977.54 points in midmorning trade, after climbing to 23,032.17 points, its highest level since May 21.
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.
Index heavyweight stocks led the gains, with Fast Retailing , an operator of Uniqlo clothing stores, up 1.0 percent and industrial machinery maker Fanuc Corp adding 0.9 percent. The two stocks contributed a hefty 25 points to the Nikkei benchmark index.
Mining was top gaining sector 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 1.7 percent.
On the weak side of the market, bank stocks languished. Mitsubishi UFJ Financial Group shed 0.8 percent and Sumitomo Mitsui Financial Group fell 1.0 percent.
The broader Topix added 0.1 percent to 1,741.69. (Reporting by Ayai Tomisawa Editing by Darren Schuettler)