Nikkei recovers on chip-related stocks, but US economic woes cap gains

TOKYO, March 14 (Reuters) - Japan's Nikkei share average reversed course to trade higher on Friday, as investors purchased chip-related stocks and other undervalued shares, although concerns over the U.S. economic outlook limited further gains.

The Nikkei .N225 was up 0.35% at 36,919.12 by the midday break, while the broader Topix .TOPX traded 0.4% higher at 2,709.04.

"The market is concerned about uncertainties about the U.S. economy, and that weighed on stocks in the U.S. and Japan," said Takamasa Ikeda, senior portfolio manager at GCI Asset Management.

"But losses are also limited as there is a demand from institutional investors, such as pension funds, who want to buy stocks to rebalance their portfolios at the end of Japan's fiscal year," said Ikeda.

Chip-testing equipment maker Advantest 6857.T jumped 4%, providing the biggest boost to the Nikkei, while Toyota Motor 7203.T climbed 2.1%.

Fujikura 5803.T, a cable maker and a gauge for data centre investments, jumped 4.5%.

Shares of Canon 7751.T climbed 3.2% after the Japanese camera maker launched plans to buy back up to 2.8% of its shares.

In addition to fears of the impact of U.S. President Donald Trump's tariff threats, his comments about the U.S. recession at Fox News interview weighed on the sentiment of equity investors, said Hiroyuki Ueno, chief strategist at Sumitomo Mitsui Trust Asset Management.

"But I think the market could turn its course after April 2 when Trump has vowed to impose reciprocal tariffs on the U.S. trading partners," Ueno said.

Staffing agency Recruit Holdings 6098.T fell nearly 3% to weigh on the Nikkei the most. Uniqlo-brand Fast Retailing 9983.T lost 0.2%.

Of all the 225 components on the Nikkei, 139 stocks rose and 82 fell, with four were trading flat.