(Updates at 0600 GMT)

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

shed early gains to end lower on Wednesday as investors sold

growth stocks after the nation's benchmark 10-year yield hit its

highest in more than 12 years.

The Nikkei fell 0.77% to close at 38,556.87, after

rising as much as 0.7% to track strong performances of U.S.

chip-related stocks, driven by AI darling Nvidia ( NVDA ).

The broader Topix ended nearly 1% lower at 2,741.62.

"The market became nervous about rising JGB yields,

which is a headwind for heavyweight growth stocks," Shoichi

Arisawa, general manager of the investment research department

at IwaiCosmo Securities said.

"The gains in domestic stocks were eliminated by the rising

JGB yields."

Japan's 10-year bond yield hit 1.075%, its

highest level since December 2011, as traders gauged growing

bets that policy tightening by the Bank of Japan is imminent.

Higher yields could hurt growth stocks whose appeal lies in

future cash flows.

The Topix's growth stock index lost 1.1%, while

the value shares index fell 0.8%.

Chip-making equipment maker Tokyo Electron ( TOELF ) shed

early gains to end 0.3% lower. Shares of air-conditioning maker

Daikin Industries ( DKILF ) fell 2.3% and Uniqlo-brand owner Fast

Retailing ( FRCOF ) lost 1.2%.

Mitsubishi Electric ( MIELF ) fell 4.5% as the home

appliances maker lowered the target for its return-on-equity to

9% from 10%.

Nuclear power plant operator Tokyo Electric Power Holdings

fell 8.3% to become the biggest percentage loser on the

Nikkei.

The utility sector fell 2.6% to become the

worst performer among the Tokyo Stock Exchange's 33 industry

sub-indexes.

Chip-testing equipment maker Advantest ( ADTTF ) rose 0.8%

and SoftBank Group gained 2.7%, supported by an

overnight 7% gain in shares in Nvidia ( NVDA ). An index of U.S.

semiconductors rose nearly 2%.

The insurance sector was the top performer,

rising 0.8%, with Sompo Holdings ( NHOLF ) jumping 4.2% to become

the top percentage gainer on the Nikkei.