Updates with closing prices

By Rocky Swift

TOKYO, July 14 (Reuters) - Japan's Nikkei share average rallied on Tuesday, supported by bargain-buying and a tailwind from the tech-heavy South Korean market.

The benchmark Nikkei 225 .N225 rose 0.74% to close at 67,743.50, reversing an earlier slide of as much as 1.45%. The broader Topix .TOPX gained 0.79% to 4,038.98.

Shares were broadly lower in the morning, taking cues from a decline in the U.S. market overnight after renewed U.S.-Iran hostilities caused a sharp rise in oil prices.

The Nikkei turned higher in the afternoon along with a recovery in South Korea's Kospi .KS11, as correlation between the markets has strengthened recently.

"We are seeing some buying on the dip," said Maki Sawada, an equities strategist at Nomura Securities.

Central bank policy remained in focus after Reserve Bank of New Zealand Chief Economist Paul Conway warned that higher oil costs risk making inflation more persistent, reinforcing signals of further tightening across major economies.

Mitsubishi UFJ Financial Group 8306.T, Japan's largest banking group, advanced 1.67% to an all-time high, making it the biggest company in the domestic market in term of market value.

"As interest rates rise, there are expectations that bank net interest margins will improve to some extent, leading to gains in the banking sector," Nomura's Sawada said.

Market breadth was overwhelmingly positive, with 176 advancers on the Nikkei against 47 decliners and two unchanged.

The largest gainers were Shiseido 4911.T, up 5.11%, followed by Kawasaki Kisen Kaisha 9107.T, 4.73% higher, and Tokuyama 4043.T, which gained 4.17%.

The largest losers were Yaskawa Electric 6506.T, down 8.98%, followed by Panasonic Holdings 6752.T, 5.57% lower, and Toppan Holdings 7911.T, which lost 4.64%.