TOKYO, Feb 14 (Reuters) - Japan's Nikkei share average retreated from a 34-year high on Wednesday, weighed by Wall Street's sharp declines overnight, however, a weaker yen and hot investor demand are expected to push the benchmark back toward fresh peaks in the near-term.

The index had climbed to 38,010.69 in the previous session, not far from the record intraday high of 38,957.44 in December 1989 and closed at its highest since January 1990. The Nikkei has risen 12.7% so far this year.

On Wednesday, the Nikkei fell 0.69% to close at 37,703.32. The broader Topix lost 1.05% to 2,584.59.

Wall Street's main indexes tumbled overnight after a higher-than-expected consumer inflation reading pushed back market expectations of imminent interest rate cuts, driving U.S. Treasury yields higher.

"The Nikkei needed to take a pause to slow down its pace today after it outperformed market expectations to rise so sharply," said Ikuo Mitsui, fund manager at Aizawa Securities.

"But there is still a demand from investors who had cut weightings of Japanese stocks in the past. Many investors want to build positions of Japanese shares and they target large and liquid stocks."

A weaker yen will also be a positive factor for the Nikkei. The yen overnight fell to 150 yen against the dollar for the first time since Nov. 17.

Technology investor SoftBank Group fell 3.36%, becoming the biggest drag on the Nikkei, after shares of British chip designer Arm Holdings slumped 14%.

Staffing agency and publisher Recruit Holdings lost 3.98% and air-conditioning maker Daikin Industries fell 2.33%.

Tokyo Electron, a manufacturer of chip making equipment, gave up early gains to end 0.56% lower.

Advantest, which makes chip-testing tools, climbed 2.68% and Uniqlo-brand clothing store operator Fast Retailing rose 1.22%.

(Reporting by Junko Fujita; Editing by Sam Holmes)