TOKYO/SINGAPORE, Aug 17 (Reuters) -

Japan's Nikkei share average ended just above a 2-1/2-month low on Thursday, as concerns over China's faltering economic recovery and the possibility of further rate hikes by the U.S. Federal Reserve soured the mood in Asia.

The Nikkei fell nearly 1.5% at 31,309.68, its lowest since early June, before paring some of those losses to end the session 0.44% lower at 31,626.00.

The broader Topix similarly fell 0.34% to 2,253.06, having earlier touched a roughly one-month low of 2,227.62.

"Investors were reacting only to negative market cues - rising global yields and ongoing worries about China's economy," said Takehiko Masuzawa, trading head at Phillp Securities Japan.

The benchmark 10-year U.S. Treasury yield hit its highest since October at 4.3120% on Thursday, on the view that rates would remain higher for longer after a recent run of data


the U.S. economy's resilience.

Minutes from the Fed's July meeting on Wednesday also showed that officials were divided over the need for more rate hikes.

That pushed the yen to a nine-month low of 146.565 per dollar. The dollar/yen pair closely tracks the 10-year U.S. Treasury yield.

"The yen's weakness to the dollar drove speculation for the government intervention. If that happens, the yen will strengthen, which is negative to Japanese equities."

Uniqlo brand owner Fast Retailing lost 0.16% and was the biggest drag on the Nikkei. Technology investor SoftBank Group ended marginally higher, while healthcare equipment maker Terumo closed 2.24% lower.

Tourism-related shares weakened even after data signalled a firm recovery in the nation's tourism. Cosmetics maker Shiseido slipped 3.3% and department store operator Isetan Mitsukoshi Holdings fell nearly 3%.

The number of visitors to Japan in July rose to its highest since the pandemic, official data showed on Wednesday, as a weaker yen helped in boosting tourism and contribute to a growth surge in the world's third-largest economy.

The 33 industry sub-indexes on the Tokyo Stock Exchange ended mixed, with steel makers, down 1.2%. Kobe Steel lost 1%. (Reporting by Junko Fujita; Editing by Varun H K)