* SoftBank tumbles as said to be eyeing investment in We Work
* China-related stocks underperform
* Defensive stocks rally
By Ayai Tomisawa
TOKYO, Oct 10 (Reuters) - Japan's Nikkei edged lower in a choppy Wednesday morning as weakness in China-related firms offset gains in defensive shares amid caution over the recent global equities selloff sparked by rising U.S. bond yields and fears about China's growth outlook.
On Tuesday, U.S. President Donald Trump repeated a threat to impose tariffs on $267 billion worth of additional Chinese imports if Beijing retaliates for the recent levies and other measures the United States has taken in the countries' escalating trade war.
The Nikkei share average shed 0.3 percent to 23,407.74 at the midday break, after flirting with positive territory earlier. On Tuesday, it dropped 1.3 percent for its biggest percentage decline in nearly two months, although it was supported above its 25-day moving average of 23,367.95.
While U.S. Treasury yields came off highs overnight, investors were wary given the propensity for further spikes in the wake of strong U.S. data and a hawkish Federal Reserve.
"On a day like today, defensive shares are favoured as U.S. yields fell. But investors are still wary that U.S. yields may start rising further again, so the market condition is still unstable," said Shoji Hirakawa, a chief global strategist at Tokyo Tokyo Research Institute.
The utility sector advanced 1.2 percent, after tumbling 1.4 percent to post the biggest percentage drop in a month. Tokyo Gas jumped 1.5 percent and Chubu Electric Power gained 1.3 percent.
The land transport sector was up 1.3 percent. after it fell to a three-week low on Tuesday. West Japan Railway Co gained 1.1 percent and Central Japan Railway Co rallied 1.6 percent.
Firms with large exposure to China continued to slide. Hitachi Construction Machinery declined 1.0 percent and Fanuc skidded 1.6 percent.
Index-heavyweight SoftBank Group Corp tumbled 3.5 percent to near a one-month low after a source told Reuters that the technology conglomerate is in talks to take a majority stake in shared office space provider WeWork Cos.
Citing people familiar with the matter, the Wall Street Journal reported earlier that the investment could be between $15 billion and $20 billion and would likely come from SoftBank's Vision Fund.
Traders said the timing of the report was negative for SoftBank, which has invested in global IT companies, whose shares have been under pressure.
"SoftBank's Vision Fund is like a canned IT companies, and when FANG stocks and U.S.-listed Chinese titans have been sold heavily, investment in another start-up company is a worrying factor," said a market analyst at a Japanese brokerage firm.
"It could have been positive when appraisal gains are expanding, but it is seen as a bad timing for such an investment."
The broader Topix was flat at 1,761.23.
Editing by Shri Navaratnam