TOKYO, May 16 (Reuters) - Japanese shares fell on

Friday, weighed down by a stronger yen, while investors took a

cautious stance after the Nikkei crossed the psychologically

important level of 38,000 this week.

The Nikkei fell 0.25% to 37,659.39 by the midday

break, but is set to rise 0.4% for the week to mark its fifth

straight weekly gain.

The broader Topix slipped 0.19% to 2,733.8 and is on

course for a 0.2% weekly gain.

"The Nikkei rose to 38,000 from around 31,000 in just over a

month. Most investors don't think the index will keep rising at

the same pace," said Seiichi Suzuki, chief equity market analyst

at Tokai Tokyo Intelligence Laboratory.

The Nikkei has fully recouped its losses since U.S.

President Donald Trump's April 2 tariff announcements, rising

more than 20% from its 1-1/2-year low hit on April 7.

The yen rose 0.3% to 145.2 against the dollar on

Friday after downside surprises on U.S. economic data this week

cemented bets of more Federal Reserve rate cuts this year.

A stronger yen typically weighs on exporter shares by

reducing the value of overseas earnings when converted back into

Japanese currency.

Chip-related Tokyo Electron ( TOELF ) and Advantest ( ADTTF )

fell 3.21% and 2.62%, respectively, to drag the Nikkei the most.

Sony Group ( SONY ) slipped 2.96%.

Bucking the trend, Mitsubishi UFJ Financial Group ( MUFG )

rose 1.53% after announcing a share buyback worth about 250

billion yen ($1.72 billion).

Peers Sumitomo Mitsui Financial Group ( SMFG ) and Mizuho

Financial Group ( MFG ) fell 1.96% and 1.94%, respectively,

even as the three banking groups posted record annual net profit

in the last financial year.

"Share buybacks are a strong tailwind for stock prices, and

Japanese firms are set to buy back as much as 8.5 trillion yen

worth of shares in April and May alone. The Nikkei's recovery

will continue," said Tokai Tokyo's Suzuki.

Phone company KDDI ( KDDIF ) also rose 0.6% after announcing

as much as 400 billion yen ($2.76 billion) worth of share

buybacks.

($1 = 145.1300 yen)