TOKYO, March 4 (Reuters) - Japanese shares rose modestly on Tuesday, tracking a pickup in Wall Street futures as early U.S. Democratic primary results dribbled in, although the gains were limited by broader risk aversion as a Federal Reserve rate cut failed to soothe nerves.
Supporting U.S. stock futures was a resurgent former U.S. Vice President Joe Biden in the Democrats' "Super Tuesday" primaries over chief rival Senator Bernie Sanders, who is seen as being tougher on big business.
After a volatile session, the Nikkei share average rose 0.35% to 21,156.99 by midday while the broader Topix gained 0.11% to 1,506.71, briefly touching a six-month low. Both indexes stood not far from six-month lows.
More than one-third of the delegates who pick the eventual nominee at a July convention are up for grabs in primary elections in 14 states on Tuesday, which could provide some clarity in a muddled race for the White House.
Still, the market mood was grim as the spread of coronavirus both in Japan and globally looks set to hit companies' bottom lines well beyond the current quarter.
"A Fed rate cut had been already priced in. And in a sense the hasty move gave you the impression that the Fed's ammunition is quickly dwindling," said Hiroyuki Ueno, senior strategist at Sumitomo Mitsui Trust Asset Management.
"And the fundamental problem is we are dealing with a virus, which does not care about interest rates," he said.
Banks were the biggest losers as falls in U.S. bond yields to record low look set to shrink their income further at a time negative domestic interest rates are hurting their profits.
Bank index fell 1.7%, with MUFG falling 2.0%, SMFG losing 1.6% and Mizuho shedding 1.5%.
Insurers, who also increasingly rely on foreign bonds for income, also suffered. The insurer index fell 0.6%.
Meanwhile, many exporters were bruised by a rise in the yen, which hit a five month high of 106.85 per dollar on Wednesday following the Fed's rate cut.
Shin-Etsu Chemical fell 2.8% while Fanuc lost 1.3%. Toyota Motor dropped 0.6%.
Telecom companies did better as the coronavirus shifted many businesses to remote work situations, boosting demand for communications systems. KDDI rose 5.1% while NTT Docomo gained 3.3%. (Editing by Sam Holmes)