Nikkei sheds early gains as mood turns cautious ahead of Nvidia earnings

By Kevin Buckland

TOKYO, May 28 (Reuters) - Japan's Nikkei share average shed early gains of as much as 1.2% to end flat on Wednesday, as the mood turned cautious ahead of earnings from artificial intelligence chip leader Nvidia NVDA.O later in the day.

The Nikkei .N225 ended the day down 1.71 point at 37,722.40, effectively unchanged but snapping a three-day rally.

The broader Topix also finished essentially flat but up 0.02 point at 2,769.51.

Japanese stocks were initially buoyed by a sharply weaker yen, which boosts the value of overseas revenues for the country's many heavyweight exporters.

However, a poor auction of super-long Japanese government bonds also saw yields pushing higher again, weighing on sentiment.

The Nikkei particularly struggled above the key psychological level of 38,000, after pushing as high as 38,178.73 in morning trading.

Some additional push is needed to take the Nikkei firmly above 38,000, such as further positive developments in U.S. tariff negotiations, said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.

While a weaker yen supports sentiment, "one can't say the foreign-exchange market has stabilized", he added.

Despite the more cautious finish to the session, chip-testing equipment maker and Nvidia supplier Advantest 6857.T remained the Nikkei's biggest gainer in index-point terms through to the close, ending with a 1.6% advance.

By contrast, chip-making machinery manufacturer Tokyo Electron 8035.T flipped from early gains to finish down 0.1%.

Automakers as a group had been strong in early trading but ended the day mixed. Honda 7267.T climbed 1.3%, but Toyota 7203.T reversed gains to drop 0.3%.

Nissan 7201.T was among the most volatile stocks on the day, leaping as much as 4.6% at the start of the afternoon session following a media report that it plans more than $7 billion in fundraising to help turn the business around. However, it shed those gains to end the day down 0.3%.