(Updates prices, add details on investor flows, investor

comment in paragraphs 6-8)

By Rocky Swift

TOKYO, July 3 (Reuters) - Japan's Nikkei share gauge

eked out a small gain on Thursday even as uncertainty over a

trade deal with the United States and the threat of heavy

tariffs kept a lid on investor optimism.

Japanese shares were under water most of the session before

breaking higher at the close. The Nikkei 225 Index ended

0.1% higher, snapping a two-day decline. The broader Topix

also rose 0.1%.

Prolonged trade negotiations with the U.S. have yet to

produce a deal, with President Donald Trump recently threatening

even higher tariffs on Japan from as soon as next week.

Prime Minister Shigeru Ishiba said on Wednesday he was

determined to protect Japan's national interests, while chief

trade negotiator Ryosei Akazawa was reported to be organising

his eighth visit to the U.S. as early as this weekend.

"If the negotiations do not produce results, it will be a

major blow to the Japanese economy," said Nomura strategist

Fumika Shimizu.

The Nikkei has taken a breather after surging more than 4.5%

last week, largely on the back of gains in artificial

intelligence-related companies.

Foreigners bought a net 651.3 billion yen ($4.5 billion)

worth of Japanese stocks in the week to June 28, marking their

12th week of buying out of the past 13, data from finance

ministry showed.

Investors were also cautious ahead of key employment data in

the U.S. on Thursday and a market close on Friday for the

Independence Day holiday, said Takamasa Ikeda, portfolio manager

at GCI Asset Management.

"Overseas investors may also be taking a wait-and-see

approach today," he said.

There were 130 advancers on the Nikkei index against 92

decliners.

JFE Holdings ( JFEEF ) surged 5.4%, leading an advance among

iron and steel makers, which were the biggest gainers among the

Tokyo Stock Exchange's 33 industry sub-indexes.

Chip-sector heavyweight Renesas jumped 4.8%. Tokyo

Electron ( TOELF ), a maker of semiconductor production

equipment, rose 1.8%.

The largest losers by percentage on the Nikkei were NH Foods ( NHFOF )

, down 4.8%, followed by Konami Group ( KNAMF ), which

lost 4.3%, and Muji-brand retailer Ryohin Keikaku ( RYKKF ),

which slid 3.7%.