(Updates with prices as of 0230 GMT)

By Brigid Riley

TOKYO, Oct 2 (Reuters) - Japan's Nikkei share average

edged lower on Wednesday, after escalating tensions in the

Middle East left investors with little appetite for riskier

assets as markets awaited further developments.

The Nikkei slid 1.6% to 38,013.76 by the midday

break, while the broader Topix was down 0.79% at

2,669.63.

Iran launched ballistic missiles on Tuesday, spurring vows

from Israeli Prime Minister Benjamin Netanyahu that its arch foe

would pay for the attack. Tehran said any retaliation would be

met with "vast destruction", raising fears of a wider war.

"The escalation in the Middle East has resulted in a classic

risk-off reaction, posing headwinds for broader Japanese

equities," said Charu Chanana, global market strategist and head

of forex strategy at Saxo.

Japanese technology shares led losses, following their U.S.

peers lower after a near 3% drop on the Philadelphia SE

Semiconductor index overnight.

Wall Street's three main stock indexes also ended lower on

Tuesday, with the Nasdaq losing more than 1%, as a risk-off mood

spread following news of Iran's attack.

Tokyo Electron ( TOELF ) slipped 2.76%, Advantest ( ADTTF )

fell 3.7%, and SoftBank Group was down 1.64%.

Outside of tech, Uniqlo parent firm Fast Retailing ( FRCOF )

shed 3.22% to weigh the heaviest on the Nikkei, among 155 of the

index's 225 constituents in the red.

Defence-related stocks were among the shares to gain

following the news. Kawasaki Heavy Industries ( KWHIF ) rose

1.62%, after rallying in the previous session on bets that the

sector would benefit from the new Ishiba administration.

Inpex ( IPXHF ), up 4.97%, and other energy shares also rose,

buoyed by a jump in oil prices on fears that the Middle East

conflict could disrupt supply.

Oil and coal producers were among the best

performers by sector, climbing about 3%, just behind miners

, which advanced 4.86%.