TOKYO, April 10 (Reuters) - Japan's Nikkei share average closed lower on Wednesday, as investors booked profits after two straight sessions of gains, while caution prevailed ahead of a key U.S. inflation reading.

The Nikkei fell 0.48% to 39,581.81 after the index rose nearly 1% each in the previous two sessions. The benchmark slumped nearly 2% on Friday in its biggest decline in almost a month.

"The Nikkei rose in the past two days, which prompted investors to sell stocks," said Naoki Fujiwara, a senior fund manager at Shinkin Asset Management.

"Also, the market turned cautious ahead of the U.S. consumer price inflation data for March, which could indicate the timing of the U.S. rate cuts."

Investors will closely watch the U.S. data due later in the day as they seek direction on the Federal Reserve's next move in interest rates. The data is expected to show a rise in headline inflation to 3.4% year-on-year, from 3.2% in February.

Shares of Uniqlo brand owner Fast Retailing fell 1.11% to become the biggest drag in the Nikkei.

Chip-testing equipment maker Advantest slipped 1.03%.

Bucking the trend, chip-making equipment maker Tokyo Electron rose 0.77% and silicon wafer maker Shin-Etsu Chemical gained 0.8%.

Heavy industries group IHI lost 5.44% to become the worst performer on the Nikkei.

City gas supplier Tokyo Gas advanced 5.12%, making it the biggest gainer on the Nikkei.

The broader Topix slipped 0.43% to 2,742.79, with Toyota Motor falling 0.95% to become the biggest drag.

Trading house Mitsui & Co lost 2.44%

Seven & i Holdings reversed course to fall 1.61% as the retail conglomerate said it was considering a listing of its superstore business as part of a plan to maximise corporate value.

(Reporting by Junko Fujita; Editing by Sherry Jacob-Phillips and Subhranshu Sahu)