Japan's Nikkei retreats from record high as Iran conflict concerns resurface

By Rocky Swift

TOKYO, May 11 (Reuters) - Japan's Nikkei share average touched a record high early on Monday before erasing gains as the Middle East crisis outweighed optimism over corporate earnings and technology investment.

The benchmark Nikkei 225 Index edged 0.1% lower to 62,666.57, after jumping to an all-time high of 63,385.04 earlier in the session. The broader Topix climbed 0.23% to 3,838.26.

Wall Street climbed to record highs on Friday, underpinned by artificial intelligence-related stocks such as Nvidia (NVDA) and SanDisk (SNDK).

The optimism carried into Asia where Japanese chipmaker Kioxia (KXHCF) jumped 6.8% on Monday after a 22% surge last week.

Shares of video-game maker Konami Group (KNAMF) and Japan Tobacco (JAPAF) were among top gainers in the Nikkei after both companies posted strong earnings late on Friday.

Japanese shares erased early gains as U.S. President Donald Trump rejected Iran's response to a proposal for peace talks, dimming hopes for an end to the conflict that has driven up global energy costs. Higher gasoline prices dragged U.S. consumer sentiment to a record low in early May, data showed on Friday.

"Capital investment in AI-related sectors is increasing, and the view that strong demand for these companies will continue is a positive factor for shares," said Wataru Akiyama, an equities strategist at Nomura Securities.

"However, uncertainty surrounding the situation in the Middle East has intensified, and economic data was also released that raised concerns about consumer sentiment."

There were 139 advancers in the Nikkei index against 83 decliners. Nintendo (NTDOF) was among the biggest decliners, down 6.5%, after the company hiked prices on its Switch 2 video-game console.