Japanese shares erased most of their early gains to end flat on Wednesday, as caution regarding the domestic corporate outlook and key U.S. inflation data later in the day dented sentiment.

The Nikkei share average inched up 0.08% to close at 38,385.73, after rising more than 1% earlier in the session.

The broader Topix also pared early gains to end flat at 2,730.88.

"The early gains did not last long as pessimistic corporate outlook hurt investor sentiment," said Naoki Fujiwara, senior general manager at Shinkin Asset Management.

"And the market was cautious about the U.S. inflation data due out soon."


Sony Group jumped 8.23% after the tech and entertainment conglomerate pledged to boost shareholder returns and forecast higher annual profit.

Chip-making equipment maker Tokyo Electron rose 1.85% to provide the biggest support to the Nikkei.

Chip-testing making equipment maker Advantest advanced 1.86%%.

Isetan Mitsukoshi Holdings surged 13.57% to become the top percentage gainer on the Nikkei after the department store operator reported gains in its annual sales and profits.

All eyes are now on the U.S. consumer prices report that could dictate the path of Federal Reserve policy. The data is expected to show CPI rose 0.3% month-on-month in April, down from a 0.4% growth the previous month, according to a Reuters poll.

Nitori Holdings tanked 16% to become the biggest loser on the Nikkei, after the home-goods shop operator's annual net profit forecast missed market expectations.

Rakuten Group fell 3.15% after the internet conglomerate logged its 15th consecutive quarter in the red, as losses at its mobile service network unit outweighed a record performance by its financial unit. Of more than 1,600 stocks on the Tokyo Stock Exchange's prime section, 482 stocks rose and 1,140 fell with 29 flat.

(Reporting by Junko Fujita; Editing by Rashmi Aich and Janane Venkatraman)