TOKYO, Aug 14 (Reuters) - Japan's Nikkei share average dipped on Friday on profit taking and sliding oil prices, although fears of severe weakening in the Chinese yuan continued to wane for now, cushioning the losses.
The Nikkei slid 0.2 percent to 20,557.21 with index heavyweight Fast Retailing shedding 0.6 percent.
The Nikkei was on track for a decline of about 0.8 percent this week.
"The previous day's (0.9 percent) rise prompted profit taking before the weekend. Extreme fears over China are receding, but that does not mean that concerns over the Chinese economy have faded," said Hiroichi Nishi, equity general manager at SMBC Nikko Securities in Tokyo.
After guiding the currency sharply lower through the week, the People's Bank of China on Friday set the yuan's midpoint at a slightly higher level. This was in line with its statement the previous day that there was no basis for further currency weakening.
Global equity markets were buffeted earlier this week when China declared that it would allow a steep fall in the yuan, generating fears of a resulting currency war.
As the yuan's slide slowed for now, companies linked with inbound tourism received some respite.
Cosmetics maker Shiseido rose 3.6 percent and its peer Kose gained 2.1 percent.
Meanwhile, "Tumbling crude oil prices are dampening sentiment and generating selling in shares tied to commodities," Nishi at SMBC Nikko Securities said.
Top oil and gas producer Inpex Corp fell 1.5 percent, while refiner JX Holdings dropped 1.4 percent.
U.S. crude oil remained close to the lowest in over six years as rising U.S. stockpiles stoked oversupply concerns and on worries over demand from slowing economies in Asia.
Still, analysts pointed to the longer-term benefits of cheaper oil for countries like Japan, which relies heavily on imports.
"Oil prices continue to move lower, which is a cause of concern for some in the United States. But it's actually a very good thing for Japan. Many equity rallies have followed periods where there have been sharp declines in oil prices," said Stephen Worrell, director of equity cash sales at Credit Suisse in Tokyo.
The broader Topix stood virtually flat at 1,668.12.
The JPX-Nikkei Index 400 was also little changed, at 15,040.15. (Reporting by Shinichi Saishiro; Additional reporting by Joshua Hunt; Editing by Eric Meijer)