* Banks, insurers underperform on falling U.S. yields
* Exporters mostly weak as yen strengthens
* Nintendo jumps on enthusiasm for Super Mario Odyssey for Switch
TOKYO, June 15 (Reuters) - Japan's Nikkei share average fell in choppy trade on Thursday, after weak U.S. inflation data overshadowed an interest hike by the Federal Reserve, while falling U.S. yields dragged down financial stocks.
Also souring sentiment was a Washington Post report that U.S. President Donald Trump is being investigated by special counsel for possible obstruction of justice.
The Nikkei ended 0.3 percent lower at 19,831.82, after briefly entering positive territory in early morning trade.
"Overall sentiment was soured after the yen strengthened... Both weak U.S. economic data and the Trump probe report would become reasons for the yen to be bought," said Isao Kubo, an equity strategist at Nissay Asset Management.
The dollar dropped to an eight-week low of 108.81 yen overnight before recovering to trade at 109.59 yen, pressuring exporters. Toyota Motor Corp dropped 1.1 percent and Panasonic Corp tumbled 1.6 percent.
Financials underperformed on falling U.S. yields, with the banking sector shedding 1.5 percent and the insurance sector stumbling 1.8 percent. Mitsubishi UFJ Financial Group declined 2.0 percent, T&D Holdings stumbled 2.2 percent and Dai-ichi Life Holdings fell 1.5 percent.
The U.S. Federal Reserve raised its main interest rate to a range of 1.00 to 1.25 percent as expected, and gave its first clear outline on how it plans to reduce its $4.2-trillion bond portfolio. Fed policymakers also signaled they were likely to raise rates once more this year.
But the Fed rate hike was overshadowed by poor inflation and retail sales data.
"The market is relieved that the big event has passed. But the result left the market with lots of questions after weak U.S. economic data," said Takuya Takahashi, a strategist at Daiwa Securities.
Consumer prices unexpectedly fell on month in May and the annual increase in core CPI slipped to 1.7 percent, the smallest rise since May 2015, after advancing 1.9 percent in April.
Retail sales fell 0.3 percent last month - the largest fall since January 2016 and below economists' expectations for a 0.1 percent gain.
"It is difficult for investors to imagine that the U.S. economy will recover from the first quarter and that inflation will rise anytime soon," said Daiwa's Takahashi.
Bucking the trend was Nintendo Co, soaring 4.3 percent and extending its gains after it announced on Twitter the previous day that it would release Super Mario Odyssey for Switch on Oct. 27.
The broader Topix dropped 0.2 percent to 1,588.09. (Reporting by Ayai Tomisawa; Editing by Eric Meijer)