Tokyo's Nikkei declines but chips advance

TOKYO, Apr 5 (Reuters) The Nikkei share average slipped 0.23 percent on Thursday, as investors turned cautious following a two-day rally and sold shares of Fast Retailing Co. Ltd. and other recent gainers.

Shares of Elpida Memory Inc. and other chip firms advanced after U.S. memory chip maker Micron Technology Inc. on Wednesday said it saw strong demand for the rest of the year.

After a two-day, 500 point rise in the Nikkei, market participants were reluctant to push stock prices higher, said Takahiko Murai, general manager of equities at Nozomi Securities.

''There doesn't seem to be anyone who wants to buy the Nikkei above 17,500,'' Murai said.

''It appears that corporate earnings may be peaking ...

around the level of 17,000 seems to be neither overpriced or underpriced.'' The Nikkei was down 39.63 points at 17,504.46 as of 0110 GMT. It booked its highest close since Feb. 28 on Wednesday.

The TOPIX was down 0.43 percent at 1,723.15.

Fast Retailing dropped 1.6 percent after jumping nearly 7 percent in the previous session.

Honda Motor Co. Ltd. gave up 0.9 percent to 4,210 yen after a 2.4 percent advance in the previous session.

Elpida Memory gained 2 percent to 5,160 yen.

Rival Micron said demand for DRAM memory, which is used in personal computers, will likely grow by more than 50 percent this year.

REUTERS SBA RN0654