TOKYO, Jan 6 (Reuters) - Japan's Nikkei share average

fell on the first trading day of 2025 on Monday as investors

sold stocks after the index's year-end rally, overshadowing

gains in technology stocks.

The Nikkei shed 1.25% to 39,394.27 by the midday

break after opening 0.13% higher.

The index gained 19% in 2024 but closed at 39,894.54 on Dec.

31, failing to maintain the 40,000 level it touched earlier in

the session.

"The Nikkei fell after rallying at the end of last year when

overseas investors were absent. But the index is at a neutral

level at around 39,400," said Shigetoshi Kamada, general manager

at the research department at Tachibana Securities.

The Nikkei's losses will be limited for some time with

demand from retail investors adding stocks to their tax-free

stock investment programme NISA, or the Nippon Individual

Savings Account, Kamada said.

"Whether the index will go up or down depends on

overseas stocks' direction."

Uniqlo parent Fast Retailing ( FRCOF ) fell 3.14% to drag the

index the most. Electronic component maker TDK slipped

3.21%.

The broader Topix fell 0.97% to 2,758.03, led by

Toyota Motor's ( TM ) 4.32% decline.

Caution over Toyota's ( TM ) last month gains outweighed optimism

for the company's outlook supported by a weaker yen, Kamada

said.

Toyota ( TM ) rose 23% in December, while Topix gained 3.9%.

Nippon Steel ( NISTF ) snapped five straight sessions of

gains to slip 0.53% after U.S. President Joe Biden blocked its

proposed $14.9 billion acquisition of U.S. Steel.

Technology heavyweights rose, tracking Wall Street's strong

finish on Friday.

Tech start-up investor SoftBank Group climbed 1.57%

to become the biggest support for the Nikkei. Chip-testing

equipment maker Advantest ( ADTTF ) rose 0.55%.