Rewrites, updates prices, adds analyst comment in paragraph 4
By Satoshi Sugiyama
TOKYO, March 24 (Reuters) - Japanese shares pared gains on Tuesday as investors were not convinced that U.S. President Donald Trump's comments about holding off on targeting Iran's energy infrastructure would lead to a breakthrough in the Middle East conflict.
The Nikkei .N225 rose 0.3% to 51,681.73 as of 0216 GMT after rising as much as 2.3% earlier in the session. The broader Topix .TOPX climbed 1.1% to 3,526.07 after jumping as much as 2.6%.
Trump postponed a threat to bomb Iran's power grid because of what he described as "productive talks" with unidentified Iranian officials. Iran denied that it had engaged in negotiations with the U.S., pushing oil prices higher.
"Few investors seem to believe the remarks will help calm the situation around the Strait of Hormuz, and many see them as little more than a temporary delaying tactic," said Tomoichiro Kubota, senior market analyst at Matsui Securities. "So when the market rises, they are quick to take profits."
The Nikkei benchmark gauge has lost nearly 12% since its February 27 close, before the war erupted.
On Tuesday, there were 195 advancers on the Nikkei index against 27 decliners.
Pharmaceutical stocks underpinned the Nikkei's gains, with Sumitomo Pharma 4506.T rising 4.9%. Energy-related shares also rose, including Eneos 5020.T, Japan's largest oil refiner, which advanced 2.7%.
Tokio Marine Holdings 8766.T was untraded at its daily limit high of 6,857 yen after Berkshire Hathaway BRKa.N said it was buying a 2.49% stake in the Japanese insurer for about $1.8 billion as part of a new strategic partnership.
The Nikkei's biggest percentage decliners were Japan Steel Works 5631.T, down 4.7%, followed by Kawasaki Heavy Industries 7012.T, which lost 3.9% and IHI Corp 7013.T which declined 3.5%.
(Reporting by Satoshi Sugiyama; Editing by Sherry Jacob-Phillips and Mrigank Dhaniwala)
((Satoshi.Sugiyama@thomsonreuters.com;))
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