TOKYO, July 1 (Reuters) - Japan's Nikkei index erased early gains to trade lower on Friday tracking overnight Wall Street losses, as investors were worried about an economic slowdown in the United States.

The Nikkei share average fell 0.88% to 26,159.53 by the midday break and is set to post a 1.2% weekly loss.

The broader Topix slipped 0.71% to 1,857.49, on course to edge down 0.5% for the week.

"Investors were concerned about the outlook of U.S. economy," said Shoichi Arisawa, general manager of the investment research department at IwaiCosmo Securities.

Wall Street ended lower overnight, with the benchmark S&P 500 posting its steepest percentage drop for the first six months since 1970, amid concerns over the Ukraine-Russia war, soaring inflation, higher interest rates and, more recently, a possible U.S. recession.

In Japan, heavyweights fell, with Uniqlo owner Fast Retailing slipping 2.12% and chip-making equipment maker Tokyo Electron losing 3.52%.

Mitsubishi Corp fell 5% and dragged the Topix the most and peer Mitsui & Co lost 5.5%.

Russia will create a firm that would take over all rights and obligations of the Sakhalin Energy Investment Company, a consortium half-held by the two trading firm and Shell.

"The news about the rights for the Sakhalin project dented investor sentiment as well," said Arisawa.

Travel-related stocks were weak, with airlines. and railways losing 1.74% and 0.45%, respectively, amid a recent rise in the number of domestic COVID-19 cases. The real estate sector lost 0.05%.

Department stores' shares rose, with Takashimaya surging 9.77% and J.Front Retailing gaining 3.28%, after their profits turned to positive in the latest quarter.

(Reporting by Junko Fujita; Editing by Rashmi Aich)