(Rewrites, updates prices, adds analyst comment in paragraph 4)

By Satoshi Sugiyama

TOKYO, March 24 (Reuters) - Japanese shares pared gains

on Tuesday as investors were not convinced that U.S. President

Donald Trump's comments about holding off on targeting Iran's

energy infrastructure would lead to a breakthrough in the Middle

East conflict.

The Nikkei rose 0.3% to 51,681.73 as of 0216 GMT

after rising as much as 2.3% earlier in the session. The broader

Topix climbed 1.1% to 3,526.07 after jumping as much as

2.6%.

Trump postponed a threat to bomb Iran's power grid because

of what he described as "productive talks" with unidentified

Iranian officials. Iran denied that it had engaged in

negotiations with the U.S., pushing oil prices higher.

"Few investors seem to believe the remarks will help calm

the situation around the Strait of Hormuz, and many see them as

little more than a temporary delaying tactic," said Tomoichiro

Kubota, senior market analyst at Matsui Securities. "So when the

market rises, they are quick to take profits."

The Nikkei benchmark gauge has lost nearly 12% since its

February 27 close, before the war erupted.

On Tuesday, there were 195 advancers on the Nikkei index

against 27 decliners.

Pharmaceutical stocks underpinned the Nikkei's gains, with

Sumitomo Pharma ( DNPUF ) rising 4.9%. Energy-related shares also

rose, including Eneos ( JXHGF ), Japan's largest oil refiner,

which advanced 2.7%.

Tokio Marine Holdings ( TKOMF ) was untraded at its daily

limit high of 6,857 yen after Berkshire Hathaway ( BRK/A ) said

it was buying a 2.49% stake in the Japanese insurer for about

$1.8 billion as part of a new strategic partnership.

The Nikkei's biggest percentage decliners were Japan Steel

Works ( JPSWF ), down 4.7%, followed by Kawasaki Heavy Industries ( KWHIF )

, which lost 3.9% and IHI Corp ( IHICF ) which declined

3.5%.

(Reporting by Satoshi Sugiyama; Editing by Sherry

Jacob-Phillips and Mrigank Dhaniwala)