* Record closes on Wall Street underpin sentiment
* Nintendo soars after better-than-expected earnings
* Banks, insurers underperform
By Ayai Tomisawa
TOKYO, July 27 (Reuters) - Japan's Nikkei share average inched up on Thursday, underpinned by a rally in riskier assets globally and a sharp jump in game maker Nintendo after it posted stronger-than-expected profits.
The Nikkei ended 0.2 percent higher at 20,079.64 points, recouping early losses.
Global equity markets were buoyed by views that the U.S. Federal Reserve may be turning more cautious on another interest rate hike this year as inflation remains stubbornly weak.
The Fed kept its benchmark lending rate unchanged at the end of a policy meeting on Wednesday, but also noted that both overall inflation and a measure of underlying price gains had declined.
"The Fed's decision first seemed to have suggested a dovish tone, and the dollar dropped. U.S. long-term yields are expected to be on the defensive, and it would serve as a tailwind to Japanese stocks," said Masayuki Kubota, chief strategist at Rakuten Securities.
"The Nikkei will likely stay in a narrow range near the 20,000-mark for a while."
For the time being, analysts said the market will be focused on earnings releases from Japanese firms for April-June.
Nintendo Co soared 7.6 percent and was the most traded stock by turnover after the console maker said it swung to a profit in the first quarter, beating analyst estimates, due to strong demand for its Switch console.
Elsewhere, Hitachi Kokusai Electric rose 4.6 percent after the electronic equipment manufacturer raised its earnings outlook for the year ending March 2018.
It now expects an operating profit of 22.5 billion yen, up from previously forecast 17.5 billion yen, thanks to increased capital spending by chip makers worldwide.
But banks and insurers underperformed.
Mitsubishi UFJ Financial Group dropped 0.5 percent, Sumitomo Mitsui Financial Group fell 0.6 percent and Dai-ichi Life Holdings declined 0.5 percent.
The broader Topix advanced 0.4 percent to 1,626.84. (Reporting by Ayai Tomisawa; Editing by Kim Coghill)