TOKYO, April 19 Reuters Japanese stocks edged higher on Monday as some investors hoped to benefit from an expected increase in semiconductor production, but worries about rising coronavirus infections capped gains.

The Nikkei 225 Index rose 0.16 to 29,731.15 by 0201 GMT, while the broader Topix rose 0.04 to 1,961.58.

Stocks opened lower but gradually erased their losses in choppy trade.

Japan and the United States agreed last week to cooperate on investment in semiconductor supply chains in response to a global shortage of chips, which is seen as a positive for Japanese chemical and industrial companies, analysts said.

However, Japanese stocks still face downside risks as the governor of Tokyo is considering another state of emergency in response to a steady increase in coronavirus infections.

Japans slow pace of vaccinations is also a negative factor for stock prices, analysts said.

Markets in the United States and Europe are racing ahead, but Japanese stocks are being left behind, said Norihiro Fujito, chief investment strategist, Mitsubishi UFJ Morgan Stanley Securities.

The difference is investors are linking vaccinations to the economic outlook. Industries that were damaged by the coronavirus last year will come under pressure again.

The stocks that gained the most among the top 30 core Topix names were ShinEtsu Chemical Co Ltd up 1.87, followed by Murata Manufacturing Co Ltd up 1.57.

The underperformers among the Topix 30 were Nintendo Co Ltd down 1.89,…