(Updates with closing prices)

TOKYO, June 2 (Reuters) - Japan's Nikkei share average

ended lower on Monday amid worries over trade tensions between

the U.S. and China, and a stronger yen, which hurt automakers.

The Nikkei fell 1.3% to 37,470.67 and the

broader Topix slipped 0.87% to 2777.29.

"Investors were worried about rising uncertainties about

trade issues," said Shoichi Arisawa, general manager of

investment research at IwaiCosmo Securities.

"Optimism over the tariff policy, which pushed the Nikkei

over the psychologically important level of 38,000 last week,

has vanished."

U.S. President Donald Trump on Friday accused China of

breaching a trade agreement with the U.S. and issued a new

veiled threat to get tougher with Beijing.

Trump later said he would speak to China's President Xi

Jinping and hopefully work out their differences on trade and

tariffs.

The yen strengthened on Monday, rising 0.6% to 143.15

against the U.S. dollar, following the declines of U.S. Treasury

yields on Friday. This also weighed on Japanese stocks, said

Arisawa.

A stronger yen typically weighs on exporter shares by

reducing the value of overseas earnings when converted back into

Japanese currency.

"One market-moving cue would be the G7 leaders' summit to be

held in Canada later this month, where we may see the fate of

trade talks between Japan and the U.S.," said Arisawa.

Automakers fell, with Toyota Motor ( TM ) and Honda Motor ( HMC )

down 2.82% and 2.11%, respectively.

Chip-related shares declined, with Advantest ( ADTTF ) and

Tokyo Electron ( TOELF ) slipping 3.76% and 1.72%, respectively.

All but five of the Tokyo Stock Exchange's 33 industry

sub-indexes fell, with the auto sector and tyre makers

losing 2% and 3.22%, respectively, to become the

worst performers.

T&D Holdings ( TDHOF ) ended 4% higher after a report said an

activist investor built a 4-5% stake in the insurer group.