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* Japan GDP shrinks sharply in Q2, adds to cautious backdrop * Geopolitical tensions continue to cap risk-appetite - traders By Ayai Tomisawa TOKYO, Aug 13 (Reuters) - Tokyo stocks were choppy on Wednesday morning as geopolitical tensions checked risk-appetite, and investors were reluctant to chase the market higher after data showed Japan's economy suffered its biggest contraction in three years. An overnight report that showed a slump in German economic sentiment and a retreat on Wall Street added to the cautious backdrop. The Nikkei ended the morning session up 0.2 percent at 15,186.10 after remaining flat most of the time. Japan's economy shrank an annualised 6.8 percent in the second quarter, the biggest contraction since the devastating March 2011 earthquake, as consumption slumped after an increase in the sales tax, Cabinet Office data showed on Wednesday. While the figure was slightly better than market forecast of a 7.1 percent drop, the Bank of Japan could face pressure for further monetary easing if weakness in exports and consumption is prolonged. "This was pretty much as we'd expected: bad. There's basically minuses in everything - private consumption down 5 percent, housing with a double-digit drop, and capex is also down," said Yuichi Kodama, economist at Meiji Yasuda Life Insurance. Toru Ibayashi, executive director at UBS Wealth Management, said speculation of additional monetary easing could grow in coming months if markets doubt that the BOJ won't be able to achieve the 2 percent inflation target. "When it becomes clear, the stock market will likely start expecting easing, so such a possibility can serve as a support to the market mid-to-long term." Exporters were stronger, with Toyota Motor Corp rising 0.2 percent and Nikon Corp gaining 1.8 percent. Sony Corp jumped 2.6 percent after it said that sales of its PlayStation 4 video game console, launched in November, has surpassed 10 million units. Bucking the trend, Ulvac Inc tumbled 24 percent after the solar power equipment maker said its full-year net profit for the year ended in June will fall 43.4 percent on year to 6.5 billion yen. In the near term, the market is expected to be influenced by the conflicts in Ukraine, Iraq and Gaza, analysts said. "We have a lot to worry about, whether it's the crisis in Ukraine, developments in Gaza or the outbreak of Ebola," said Makoto Kikuchi, the chief executive of Myojo Asset Management. The broader Topix was flat at 1,257.93, and the new JPX-Nikkei Index 400 was also flat at 11,450.42.