TOKYO, Dec 29 (Reuters) - Japan's Nikkei average was nearly flat on Wednesday, pressured by a firmer yen but finding support from bargain-hunting as underlying sentiment towards Tokyo stocks remains strong.
Investors were cautious about taking fresh buy positions in Japanese shares after seeing downbeat U.S. consumer confidence data and falls in Hong Kong and Shanghai shares on Tuesday, analysts said.
"The market is turning nervous as the yen is regaining strength. Weak U.S. economic indicators released yesterday are also making the market cautious," said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.
The benchmark Nikkei fell 0.1 percent or 7.96 points to 10,284.67.
The broader Topix index dipped 0.1 percent to 902.08.
U.S. economic trends were key for determining the outlook for Japanese stocks.
U.S. consumer confidence unexpectedly deteriorated in December, hurt by increasing worries about the labour market, while the price of U.S. single-family homes fell almost double the expected pace in October.
Still, underlying sentiment for the Nikkei stay bullish.
The Nikkei has climbed more than 12 percent since early November, though it is still down 2 percent in the year to date.
Market participants may be keen to push the Nikkei above last year's close of 10,546.44 by the final trading day on Thursday, analysts said.
Shares of resource-related companies and trading companies rose reflecting the strength in oil prices, with the key U.S. crude oil futures staying near two-year highs.
Inpex Corp, Japan's top oil and gas developer, gained 1.4 percent to 488,500 yen.
Hitachi Ltd advanced 1.9 percent to 423 yen after a report by the Nikkei daily that the country's biggest electronics conglomerate said it will review the operations and its capital relationships with a quarter of its roughly 40 businesses. (Reporting by Chikafumi Hodo; Editing by Chris Gallagher)