TOKYO, June 7 (Reuters) - Japan's Nikkei share average reversed course to fall on Wednesday, as investors turned cautious about a rally, while there were sell-offs ahead of the fixing of special quotation prices at the end of the week.

By 0142 GMT, the Nikkei fell 1% to 32,188.74 after rising as much as 0.6% to track Wall Street higher overnight.

The bourse extended gains in the previous session, ending at its highest level since July 1990.

The broader Topix lost 0.65% to 2,221.72.

"Investors turned cautions after the Nikkei's gain yesterday, which prompted them to sell stocks. That drove more sell-offs and sent the index lower," said Shoichi Arisawa, general manager of the investment research department at IwaiCosmo Securities.

Also, ahead of the June 9 setting of special quotation prices used to set values on index options and futures, investors sold stocks to keep the level lower, said Arisawa.

The closely watched settlement price, known in Japan as special quotation (SQ), is calculated from the opening prices of the 225 shares in the Nikkei share average on the second Friday of the month.

Overnight, U.S. stocks closed up, helped by some advances in economically sensitive sectors, as investors awaited inflation data and the Federal Reserve's policy meet next week.

In Japan, chip-related stocks led the declines in the Nikkei, with Tokyo Electron Ltd and Advantest Corp falling 3.03% and 3.74%, respectively.

Chipmaker Renesas Electronics Corp lost 4.73% to become the worst performer on the Nikkei.

Air-conditioner maker Daikin Industries Ltd lost 3.13% and Uniqlo brand owner Fast Retailing Co Ltd slipped 0.93%.

Bucking the trend, home appliances maker Sharp Corp jumped 4.67% to become the best performer on the Nikkei.

Of the Nikkei components, 78 stocks rose and 146 fell, with one flat.

(Reporting by Junko Fujita; Editing by Sonia Cheema)