* Kobe Steel remains untraded with glut of sell orders
* Seven & i surges on report on likely strong profit
By Ayai Tomisawa
TOKYO, Oct 10 (Reuters) - Japan's Nikkei share average edged up in choppy trade on Tuesday after a three-day weekend as the weak yen supported sentiment, but Kobe Steel's shares were set to plunge after it said it had fabricated data.
The Nikkei was up 0.4 percent at 20,763.10 points by midmorning, after opening slightly lower.
After Japan's national holiday on Monday, investors returned to the market to see the yen had weakened over the weekend as U.S. wage data from the September labour market report was seen as a sign of potentially improving inflation.
"The market expects a December rate hike, and the Nikkei has been stabilized as the dollar-yen remains strong," said Yutaka Miura, a senior technical analyst at Mizuho Securities.
Kobe Steel was untraded as sell orders dwarfed buy orders after Japan's third-biggest steelmaker revealed it had fabricated data to falsely show that its products met customer specifications.
The company said on Sunday that about 4 percent of the aluminium and copper products that it shipped from September 2016 to August 2017 were falsely labelled as meeting the specifications requested by customers.
Exporters were steady after the dollar had popped up to a near three-month high of 113.440 on Friday on the robust U.S. wages data before pulling back on North Korea concerns. During Asian trading hours, it was flat at 112.690 yen.
Toyota Motor Corp gained 1.5 percent, Mitsubishi Motors soared 1.9 percent and Tokyo Electron surged 1.8 percent.
Seven & i Holdings advanced 1.9 percent after the Nikkei business daily said that the convenience store operator will likely post 6 percent growth in operating profit for the March-August period.
Insurance stocks lost ground, with MS&AD Holdings tumbling 4 percent and Sompo Holdings diving 5.5 percent.
The broader Topix added 0.1 percent to 1,689.16. (Editing by Kim Coghill)