(Updates with closing prices)

By Kevin Buckland

TOKYO, April 3 (Reuters) - Japan's Nikkei share average

dropped 1% on Wednesday, weighed down by a fall in heavyweight

Fast Retailing ( FRCOF ), owner of the Uniqlo store chain, and overnight

declines on Wall Street.

Tech stocks tracked a slide among U.S. peers, but a powerful

quake that rocked Taiwan had only a limited impact on Japanese

chip shares.

The Nikkei lost 0.97% to 39,451.85 as of the close,

and earlier dipped to the lowest since March 18 at 39,217.04.

Fast Retailing ( FRCOF ), which is the most heavily-weighted

stock in the index by a wide margin, lost 3.34% to be the

biggest drag, contributing 154 basis points of the Nikkei's

total 387 point decline.

The stock tumbled from a record high reached earlier in the

week after the company announced late Tuesday its first

year-on-year sales decline at domestic Uniqlo outlets for three

months.

Big tech names like chip-testing equipment maker Advantest ( ADTTF )

dropped 2.14%, while Nintendo ( NTDOF ) lost more than

4%. Artificial intelligence-focused startup investor SoftBank

Group ( SFTBF ) slid 1.24%.

Tech shares underperform when borrowing costs rise, and U.S.

long-term Treasury yields jumped to the highest

since November at more than 4.4% overnight.

The broader and less tech-weighted Topix index

slipped 0.29%, with an index of growth stocks tumbling

0.8% while value shares added 0.2%.

The Nikkei has also succumbed to profit taking at the start

of Japan's new fiscal year this month, said Shoki Omori, chief

Japan desk strategist at Mizuho Securities.

Japan's stock benchmark hit an all-time high of 41,087.75 on

March 22, after the Bank of Japan (BOJ) raised interest rates

for the first time since 2007 but kept a dovish stance on

further tightening.

"I would say there's going to be dip buying and the Nikkei

could test 41,000 again (this month), unless U.S. yields keep

going higher and tech stocks keep underperforming," Omori said.

"I don't think the Nikkei will go below 37,500," he added.

"For the BOJ, keeping easy financial conditions should be the

way to support markets when external factors are pushing down

equities with force."

(Reporting by Kevin Buckland; Editing by Mrigank Dhaniwala)