Japanese shares edge higher before Nvidia results, US price data

TOKYO, Aug. 26 (Reuters) - Japanese shares edged higher on Wednesday ahead of earnings from AI bellwether Nvidia NVDA.O and U.S. inflation data that may offer clues on the timing of a Federal Reserve rate hike.

The benchmark Nikkei 225 .N225 advanced 0.56% to 66,227.55 by the midday break, reversing an early slide. The broader Topix .TOPX gained 0.61% to 4,118.44.

Wall Street's main indexes closed higher overnight ahead of Nvidia's results, which are due after the bell on Wednesday and will be closely watched for signs of growth in the AI sector that has powered gains in global shares of late.

"With Nvidia's highly anticipated earnings release looming, the upside (of domestic shares) is likely to be capped," Yoshitaka Aratani of Monex Securities said in a report.

SoftBank Group 9984.T, a major investor in AI, climbed 2.71%.

Traders were also watching the Fed's preferred inflation gauge, the U.S. Personal Consumption Expenditures (PCE) price index for July, due later on Wednesday. The release follows an unexpected decline in U.S. nonfarm payrolls and in-line consumer inflation that tempered expectations of a rate hike in September.

If the PCE comes in soft, "expectations of an interest rate rise by the Fed are likely to recede further, and this could be viewed as positive news for the stock market," said Wataru Akiyama, an equities strategist at Nomura Securities.

There were 150 advancers on the Nikkei 225 against 70 decliners, with five stocks unchanged.

The largest percentage gainers in the index were Mitsubishi Materials 5711.T, up 7%, followed by Dowa Holdings , 4.85% higher, and Tokyo Electric Power , which gained 4.71%.