Japan's Nikkei nudges higher, but snaps three-week winning streak

By Junko Fujita

TOKYO, July 4 (Reuters) - Japan's Nikkei ended slightly higher on Friday, as chip-related stocks tracked Wall Street's strong overnight performance, but the index snapped a three-week winning streak on caution ahead of the U.S. trade deal deadline.

The Nikkei .N225 was up 0.06% at 39,810.88, after hitting an intraday high of 40,012.66.

The benchmark index fluctuated between negative territory and modest gains throughout the session. For the week, the Nikkei slipped 0.85%, snapping a three-week winning streak.

The broader Topix .TOPX was flat at 2,827.95.

"Investors remained optimistic about the market outlook, but the Nikkei is still vulnerable," said Shuutarou Yasuda, a market analyst at Tokai Tokyo Intelligence Laboratory.

"As soon as it hit the 40,000 level, there was a sell-off to book profits," he said.

Wall Street rallied on Thursday to record closing highs, as chipmaker Nvidia rose closer to a $4 trillion valuation and a surprisingly strong U.S. jobs report cheered investors, who shrugged off dimming chances for an interest rate cut this month. .N

Investors remained cautious and refrained from making active bets on Japanese stocks at the end of the week, as they awaited a key U.S. trade tariff deadline next week, strategists said.

Chip-related stocks led the gains on the Nikkei, with Advantest rising 1.38% and Tokyo Electron gaining 0.46%.

Banking shares advanced as Japanese government bond yields tracked U.S. yields higher. Solid job gains in the U.S. bolstered the case for the Federal Reserve to keep interest rates on hold.

The bank sector .IBNKS.T rose 1.29%, with shares of Mitsubishi UFJ Financial Group 8306.T climbing 1.16%.

Utility sector .IEPNG.T rose 1.3% to become the top gainer among the 33 industry sub-indexes on the Tokyo Stock Exchange.

Uniqlo-brand owner Fast Retailing 9983.T fell 0.6% to weigh on the Nikkei the most.