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Japan's Nikkei sheds early gains as U.S. stock futures slide

·2 min read

TOKYO, June 22 (Reuters) - Japan's Nikkei index shed early gains to trade flat by the midday break on Wednesday, as simmering worries about the risk of a recession pushed U.S. stock futures lower after big overnight gains on Wall Street.

The Nikkei share average was 0.04% higher at 26,255.95 into the recess, after rising as much as 0.82% and hitting its highest in almost a week at 26,462.83.

The index dipped to 26,157.09 at its lowest point on Wednesday, but stayed solidly above the psychological 26,000 level it reclaimed on Tuesday. It bounced from a three-month low just above 25,500 reached at the start of the week.

The Nikkei was almost evenly split, with 117 of its 225 components rising versus 102 that fell, with six others unchanged.

The broader Topix managed gains of 0.16% to 1,859.25.

U.S. e-mini stock futures last pointed to a 0.7% drop at the restart, after the S&P 500 rallied 2.45% overnight. Most other Asian equity markets fell, including a 0.9% decline for Hong Kong's Hang Seng and a 0.48% slide for mainland Chinese blue chips.

Market participants said that until there's confirmation that red-hot U.S. inflation has peaked out, the risk that very aggressive Federal Reserve policy tightening could trigger a recession will keep stock markets heavy.

Some also noted that Japanese stocks have increasingly taken trading cues from U.S. equity futures.

"We're being pulled by the weakness in U.S. futures again today, making for unsettled price action in the Nikkei," said a market participant at a domestic asset management firm.

Automakers were among the winners, with the yen near 24-year lows to the dollar — boosting the value of overseas sales.

Toyota added 0.96% and Nissan gained 2.35%. Nissan alliance partner Mitsubishi Motors was the Nikkei's biggest percentage gainer, up 5.78%.

The biggest points gainer was Uniqlo store operator Fast Retailing, contributing 12.65 points to the Nikkei with its 0.52% advance.

Investing company SBI Holdings rallied 3.97% amid media reports that Sumitomo Mitsui Financial Group is in final talks to buy a 10% stake. SMFG was 0.1% higher.

At the other end, trading company Mitsubishi Corp was the Nikkei's worst performer, down 5.21%.

Chip-making equipment makers Tokyo Electron and Advantest were the biggest drags on the benchmark index, shaving off 55 and 11 points respectively with declines of 3.36% and 2.19%. (Reporting by Tokyo markets team; editing by Uttaresh.V)