(Updates prices as of 0230 GMT; adds analyst comments)

By Kevin Buckland

TOKYO, Aug 28 (Reuters) - Japan's Nikkei share average

edged lower on Wednesday amid a strengthening yen and caution

ahead of earnings from AI darling Nvidia ( NVDA ) later in the day.

The Nikkei ended the morning session down 0.23% at

38,199.52, continuing its narrow fluctuations since mid-month

anchored around the psychological 38,000 mark.

Of the index's 225 components, 155 fell, 65 rose, while five

were trading flat.

The broader Topix slipped 0.08%.

Market expectations for Nvidia's ( NVDA ) financial report

are sky-high, and anything short of a stellar forecast from the

chipmaker could jolt investor confidence in the AI-fuelled

rally.

"The bar is extremely high, and depending on the result,

stocks could swing wildly," which is keeping investors largely

sidelined ahead of Nvidia's ( NVDA ) announcement, said Masahiro

Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset

Management.

Japanese semiconductor-sector shares were broadly mixed,

with chip-testing equipment maker and Nvidia ( NVDA ) supplier Advantest ( ADTTF )

rising more than 3% to be the Nikkei's biggest gainer

by index points.

At the same time, chip-testing machinery giant Tokyo

Electron ( TOELF ) was the biggest drag on the index, down 1.77%.

The yen extended overnight gains in early trade to 143.69

per dollar, but then reversed course to be about 0.26% weaker at

144.34 as of 0230 GMT. On Aug. 15, it traded closer to 150 per

dollar.

A stronger yen reduces the value of overseas sales, while

also making stocks more expensive for overseas investors.

"Even though the yen is weakening a little now, the trend is

for gradual yen appreciation, which is a weight on stocks,"

Ichikawa said.

Automaker shares were mixed, with Nissan ( NSANF ) down 1.05%

and Mazda ( MZDAF ) sliding 1.03%, while Toyota Motor ( TM )

rallied 3.4% and Honda ( HMC ) advanced 0.67%.

Rakuten Group ( RKUNF ) led percentage gainers on the Nikkei,

jumping more than 9% following share price target upgrades at

Morgan Stanley MUFG Securities and Citi.