(Updates with closing prices)

By Junko Fujita

TOKYO, July 29 (Reuters) - Japan's Nikkei share average

ended lower for a third straight session on Tuesday, as concerns

over the domestic corporate outlook led investors to lock in

profits from a recent rally.

The Nikkei fell 0.79% to 40,674.55. The broader

Topix declined 0.75% to 2,908.64.

Japan is in the middle of its earnings season, and investors

are cautious as a 15% tariff to be imposed on its exports to the

United States could hit corporates, said Hiroyuki Ueno, chief

strategist at Sumitomo Mitsui Trust Asset Management.

The tariff, part of the trade deal Japan struck with the

U.S. last week, is lower than the 25% that U.S. President Donald

Trump had earlier threatened to impose on the country.

That, and expectations that Prime Minister Shigeru Ishiba

would step down sent the Nikkei to its highest level in a year

last week, Ueno said.

"The market hoped someone who promotes measures to stimulate

the economy would replace him (Shigeru Ishiba)," he said.

Ishiba vowed to remain in his post after his ruling

coalition suffered a bruising defeat in upper house elections,

prompting some in his own party to doubt his leadership as the

opposition weighed a no-confidence motion.

On Tuesday, chip-related stocks led the decline, with

Lasertec ( LSRCF ) falling 8.3% to become the worst performer on

the Nikkei.

Tokyo Electron ( TOELF ) fell 1.2% to become the biggest

drag for the Nikkei. Advantest ( ADTTF ) slipped 1%.

Nitto Denko ( NDEKF ) fell 3% after the industrial materials

maker posted a 16% decline in quarterly operating profit.

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

sub-indexes fell. The auto sector lost 1.83% to become

the worst performer.

Bucking the trend, Nomura Research jumped 8.33%

after the consulting and IT solutions provider reported a 17%

rise in quarterly net profit.