TOKYO, Aug 14 (Reuters) - Japan's Nikkei share average edged down by the midday close on Wednesday, reversing early gains as profit-taking and yen appreciation weighed on the market.

The Nikkei was down 0.2% at 36,155.26 at the midday break after rallying more than 1% after local media reported Japan's prime minister Fumio Kishida will step down as ruling party leader in September.

The broader Topix was up 0.5% at 2,565.42.

Kishida later confirmed reports in a televised press conference on Wednesday.

Analysts said Kishida's decision to step down could add some uncertainty, although the impact should be limited.

"His low approval ratings mean a significant negative reaction from equities may be avoided," said Charu Chanana, global market strategist and head of FX strategy at Saxo.

The stock market had earlier gotten a boost after U.S. producer prices increased less than expected in July, buoying bets for the Federal Reserve to cut interest rates in September and sending Wall Street higher overnight.

Japan's technology shares had tracked their U.S. peers higher, with heavyweights like artificial intelligence-focused startup investor SoftBank Group and chip-testing equipment maker Advantest rising to give the Nikkei a sizeable lift.

But those gains narrowed as investors locked in profits, and the yen strengthened during trade to weigh on export-related shares.

Market players also awaited U.S. consumer prices data due later on Wednesday for further confirmation of cooling inflation in the world's largest economy.

But retail sales and labour-related data scheduled for later in the week remain key, Saxo's Charu Chanana said.

"Markets still remain on edge about a potential U.S. recession and any signs of consumer strain could buoy the yen and bring another pullback in Japanese equities."

Financials led the gains by sector, with insurance firms up 2.6%. Banks rose more than 1%.

Among individual shares, automakers Toyota Motor and Honda Motor were up 2.3% and 2.8%, respectively, coming off earlier highs.

Chip-making equipment giant Tokyo Electron, down 2.4%, and Uniqlo parent firm Fast Retailing, losing 0.9%, became the biggest drag on the index. (Reporting by Brigid Riley; Editing by Subhranshu Sahu and Mrigank Dhaniwala)