Japan shares hampered by trade worries, defensives gain

* Nikkei up 0.27%, Topix almost flat
* Investors prefer defensives amid trade war uncertainties
* Rakuten gains on cashless service expansion

By Hideyuki Sano
TOKYO, June 6 (Reuters) - Japan's Nikkei eked out small
gains on Thursday but the market was hampered by concerns about
the U.S. trade war with Mexico and China, prompting investors to
buy domestic-demand oriented shares.
The Nikkei share average .N225 rose 0.27% to 20,832.46
though the index was propped up disproportionately by rises in
its top two heavyweights, Softbank Group 9984.T and Fast
Retailing 9983.T , which rose 3.4% and 2.8% respectively.
The broader Topix .TOPX , which investors say more
accurately reflects the market, was almost flat, up 0.03% at
1,530.59.
"Although expectations of rate cuts by the Federal Reserve
have led to rallies in U.S. shares, Japanese shares are
benefitting less because U.S. rate cuts would strengthen the
yen," said Masahiro Ayukai, senior investment strategist at
Mitsubishi UFJ Morgan Stanley Securities.
The Japanese yen hit a five-month high on Wednesday.
Worries about trade wars U.S. President Donald Trump is
waging on many fronts hampered semiconductor shares and other
exporters.
Murata Manufacturing 6981.T fell 2.3% while TDK 6762.T
dropped 2.5% and Taiyo Yuden 6976.T 2.4%.
Nissan Motor 7201.T fell as much as 3.8% and Mitsubishi
Motor up to 4.7% after Fiat Chrysler FCHA.MI said it had
abandoned its $35 billion merger offer for Renault RENA.PA ,
the alliance partner of the two Japanese firms.
Uncertainties over the global trade environment goaded
investors to seek refuge in defensive and domestic
demand-oriented shares, with the wider adoption of cashless
services by the government and companies offering a good theme
for investors to latch on to.
Rakuten 4755.T jumped 6.5% after the internet company
announced a tie-up with East Japan Railway 9020.T on cashless
services.
East Japan Railway rose 1.0% while West Japan Railway
9021.T hit a near four-year high, having risen as much as 2.6%
at one point.
Line 3938.T , which also offers rival electronic settlement
services, gained 4.1%.
Elsewhere, drugmaker Dai-ichi Sankyo 4568.T extended its
recent gains on optimism over its cancer drug, rising 1.6% and
hitting a record high.
Drugstore chain operator Cocokara Fine 3098.T rose 7.8%,
extending its gains so far this week to 34%, as it has become a
target of alliance by two of its bigger rivals, Sugi Holdings
7694.T and Matsumotokiyoshi 3088.T .
Park 24 4666.T jumped 4.5% in heavy trade as the operator
of parking spaces extended its recovery since the company's
earnings announcement at the end of last month.

(Editing by Jacqueline Wong)