(Updates with closing prices)

By Kevin Buckland

TOKYO, July 23 (Reuters) - Japan's Nikkei share average

ended marginally lower on Tuesday, extending its losing run to a

fifth consecutive session, as caution over a strengthening yen

overshadowed gains in chip stocks.

The Nikkei finished the day down 0.01% - less

than 5 index points - at 39,594.39. It rose as much as 0.8%

earlier in the session, but failed to reach the psychological

40,000 mark.

A stronger yen threatened to weigh on corporate bottom

lines among the Nikkei's exporter-heavy constituents, just as

the earnings season begins to gather pace this week.

The Japanese currency last traded at 156.20 per dollar

on Tuesday, after ending last week at 157.50.

The Nikkei sank to a three-week low of 39,519.39 on

Monday, after reaching a record peak of 42,426.77 on July 11.

"The market was a little overextended, so some kind of

temporary adjustment is to be expected," said Masayuki

Kichikawa, chief Japan macro strategist at Mitsui Sumitomo DS

Asset Management.

"There's been a very visible sectoral rotation since the

middle of last week, and tech shares are in an adjustment phase

while others are gaining momentum," he added.

"We think this adjustment will continue for some time,

but we don't think there's a change in the trend higher."

Evincing this dynamic, the broader Topix index

rose 0.21%, with a subindex of value shares gaining

0.48% while growth shares added just 0.1%.

Chip sector stocks made up the Nikkei's top two points

gainers, tracking a rally in U.S. peers overnight.

Chip-testing equipment maker and Nvidia supplier Advantest ( ADTTF )

advanced 2.87%, followed by a 1.32% rise in chip-making

machinery giant Tokyo Electron ( TOELF ).

The best performer among the Tokyo Stock Exchange's 33

industry groups was shipping, which jumped 6.62%, far

outpacing second-place banking's 1.59% advance.

Nippon Yusen was the Nikkei's biggest percentage

gainer, soaring 8.16% after raising its profit forecast. Peers

Kawasaki Kisen Kaisha ( KAKKF ) and Mitsui O.S.K. Lines ( MSLOF )

rallied 6.44% and 5.27%, respectively.

(Reporting by Kevin Buckland; Editing by Sherry Jacob-Phillips

and Varun H K)