(Updates with closing prices)

TOKYO, April 10 (Reuters) - Japan's Nikkei share average

closed lower on Wednesday, as investors booked profits after two

straight sessions of gains, while caution prevailed ahead of a

key U.S. inflation reading.

The Nikkei fell 0.48% to 39,581.81 after the index

rose nearly 1% each in the previous two sessions. The benchmark

slumped nearly 2% on Friday in its biggest decline in almost a

month.

"The Nikkei rose in the past two days, which prompted

investors to sell stocks," said Naoki Fujiwara, a senior fund

manager at Shinkin Asset Management.

"Also, the market turned cautious ahead of the U.S. consumer

price inflation data for March, which could indicate the timing

of the U.S. rate cuts."

Investors will closely watch the U.S. data due later in the

day as they seek direction on the Federal Reserve's next move in

interest rates. The data is expected to show a rise in headline

inflation to 3.4% year-on-year, from 3.2% in February.

Shares of Uniqlo brand owner Fast Retailing ( FRCOF ) fell

1.11% to become the biggest drag in the Nikkei.

Chip-testing equipment maker Advantest ( ADTTF ) slipped

1.03%.

Bucking the trend, chip-making equipment maker Tokyo

Electron ( TOELF ) rose 0.77% and silicon wafer maker Shin-Etsu

Chemical ( SHECF ) gained 0.8%.

Heavy industries group IHI lost 5.44% to become the

worst performer on the Nikkei.

City gas supplier Tokyo Gas ( TKGSF ) advanced 5.12%, making

it the biggest gainer on the Nikkei.

The broader Topix slipped 0.43% to 2,742.79, with

Toyota Motor ( TM ) falling 0.95% to become the biggest drag.

Trading house Mitsui & Co ( MITSF ) lost 2.44%

Seven & i Holdings ( SVNDF ) reversed course to fall 1.61% as

the retail conglomerate said it was considering a listing of its

superstore business as part of a plan to maximise corporate

value.