TOKYO, July 16 (Reuters) - Japan's Nikkei share average

inched down on Wednesday, as concerns surrounding the elections

to the upper house and the fate of trade negotiations with the

United States overshadowed gains from chip-related shares.

The Nikkei inched 0.09% lower at 39,642.4 by the

midday break, after swaying between small gains and losses.

The broader Topix fell 0.29% to 2,817.05.

"Investors have excuses for not buying or selling stocks,"

said Shigetoshi Kamada, general manager at the research

department at Tachibana Securities.

"They are cautiously awaiting the outcome of the upper house

election, while the outlook of the trade talks between is not

clear even as the deadline approaches."

A defeat of the ruling Liberal Democratic Party and its

coalition partner Komeito in the election on July 20 could

empower opposition parties that have pledged to cut or abolish

the sales tax.

Such worries sent Japanese government bond yields to

historic high levels, driving worries about higher borrowing

costs.

Chip-related heavyweights Tokyo Electron ( TOELF ) and

Advantest ( ADTTF ) rose 2.94% and 0.9%, respectively, to track

Nvidia's ( NVDA ) 4% gain overnight.

Shares of Nvidia ( NVDA ) jumped after the AI chip leader unveiled

plans to resume sales of its H20 AI chip to China, pushing the

Nasdaq Composite to end at another record.

Toho jumped 10.06% after the creator of the

"Godzilla" movie franchise raised its annual net profit

forecast.

Uniqlo-brand owner Fast Retailing ( FRCOF ) slipped 1.2% to

weigh on the Nikkei the most.

Toyota Motor ( TM ) lost 0.93% even as the yen fell to a

more than three-month low against the dollar.

"Investors could not buy Toyota ( TM ) despite the yen's weakness

because they are concerned about the tariff negotiations," said

Kamada.

Local media reported Prime Minister Shigeru Ishiba is

arranging to meet with U.S. Treasury Secretary Scott Bessent in

Tokyo on Friday ahead of an August 1 deadline to strike a trade

deal with the United States, else face punishing tariff of 25%.