Nikkei surrenders early gains, hurt by China worries
* Nikkei, Topix trade flat after initial rise
* Tumble for China shares affects market
* Weaker yen, Tokyo vote outcome seen as positive
* Volatility still present - fund manager
TOKYO, June 24 (Reuters) - Japan's Nikkei share average gave up early gains and ended the morning session flat in very choppy trade on Monday as global market volatility continued to unnerve investors, though a weaker yen helped cushion losses. The benchmark Nikkei finished a topsy-turvy morning session almost flat at 13,227.02, after climbing as much as 1.7 percent and falling as much as 0.7 percent earlier. The yen weakened against the dollar over the weekend as momentum builds after the Federal Reserve laid out a roadmap for scaling back stimulus. Against the greenback, the yen fell to as low as 98.51 yen, a level not seen in two weeks. The pair last traded at 98.36 yen, according to EBS data. The broader Topix also was nearly flat at 1,099.18 average for the past 90 trading days. Early in the morning, the weaker yen helped stocks yet "investors are hesitant to buy into exporters because the external situation, especially that of the emerging markets, is uncertain," said Ryota Sakagami, chief strategist at SMBC Nikko Securities. "They rather sought to scoop up stocks seen as undervalued, such as banks and non-life insurance companies." Later in the morning, a tumble in China shares hurt the market. China shares extended losses in Monday trade. By 0345 GMT, the CSI300 of the leading Shanghai and Shenzhen listings was down 4.0 percent at 2,224.4 points, its lowest intra-day level since mid-December, while the Shanghai Composite Index was down 3 percent. "The Chinese market changed the mood completely. The Nikkei stopped rising and gave up its earlier gains immediately after the Chinese market opened (in Tokyo's mid-morning)," said Kyoya Okazawa, head of global equities and commodity derivatives at BNP Paribas in Tokyo."
EMERGING MARKET WORRIES "Global markets have just started pricing in the end of China's high-growth period and investors are backing away from emerging markets," added Okazawa. "But I don't see this as a negative for the Japanese and U.S. equities in the long term." Early on Monday, market players said the outcome of the Tokyo Metropolitan Assembly election on Sunday also helped lift investor sentiment. Japanese Prime Minister Shinzo Abe's ruling bloc swept to victory in a weekend Tokyo election, a sign that it is on track for a hefty win in a July national vote that could strengthen Abe's hand as he aims to end economic stagnation.
"While the election results were not surprising at all, it is also a positive for the market. It provides investors with a sense of reassurance," said Mitsushige Akino, chief fund manager at Ichiyoshi Asset Management. "But the volatility is still present in the market. Currency movement will be in focus throughout the day," added Akino. The Nikkei China 50 index fell 1 percent. Construction machinery maker Komatsu Ltd tumbled 4 percent, while industrial robot maker Fanuc Corp fell 0.7 percent.