(Updates prices at market close)

By Kevin Buckland

TOKYO, Jan 8 (Reuters) - Japan's Nikkei share average

fell on Wednesday, tracking overnight declines in Wall Street

after a batch of upbeat U.S. economic data raised concerns that

sticky inflation could slow the Federal Reserve's pace of

monetary easing.

The Nikkei index slipped 0.26% to close at

39,981.06. Of the index's 225 components, 156 retreated, 67 rose

and two finished flat.

The broader Topix slid 0.59%, with growth shares

dropping 0.68% versus a 0.51% slide in value shares

.

The U.S. S&P 500 sank 1.1% on Tuesday, after a report

showed that services sector activity accelerated in December

2024, with a measure tracking input prices surging to nearly

two-year high.

Rate-sensitive tech shares slid, with the tech-heavy Nasdaq

index dropping 1.9%.

Chip shares initially fell in Tokyo, but rebounded over the

course of the day, with Nomura strategist Kazuo Kamitani

pointing to Nvidia's presentation at CES overnight generating

fresh buzz for the sector.

"In the end, expectations for AI, chips and everything of

that sort continue to be high."

He also flagged the psychological line at 39,500 as a

support for the Nikkei.

Nvidia-supplier Advantest ( ADTTF ) soared 3.43% and

chip-making equipment major Tokyo Electron ( TOELF ) gained 1.62%

after beginning the day lower.

Carmakers were overall supported by a weaker yen, which

continued to hover near six-month lows against the U.S. dollar.

A weak local currency boosts the value of overseas revenues.

Toyota ( TM ) gained 0.69%, while Subaru and

Mazda ( MZDAF ), both highly dependent on U.S. sales, climbed

about 0.8% each.

Uniqlo store operator Fast Retailing ( FRCOF ) shed 0.48%,

ahead of its earnings presentation on Thursday.