By Rocky Swift

TOKYO, July 14 (Reuters) - Japan's Nikkei share average struggled for direction on Tuesday as bargain buying was offset by renewed inflation and geopolitical concerns.

The benchmark Nikkei 225 .N225 swayed between gains and losses and was last up 0.10% at 67,311.44. The broader Topix .TOPX gained 0.41% to 4,023.89.

U.S. stocks fell overnight after Iran said it had again closed the Strait of Hormuz and U.S. President Donald Trump announced a reinstated blockade on Iranian ports, driving oil prices higher and weighing on risk-sensitive assets.

Japan could consider tweaking its state pension fund's allocation strategy if domestic assets increase in appeal, Finance Minister Satsuki Katayama said, rekindling expectations the massive fund may boost purchases of bonds and stocks.

"We are seeing some buying on the dip," said Maki Sawada, an equities strategist at Nomura Securities. "Concerns over the situation in the Middle East appear to have intensified."

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.

Market breadth was positive, with 156 advancers on the Nikkei 225 against 67 decliners and two unchanged.

The largest gainers in the index were Sumco 3436.T, up 6.55%, followed by Tokyo Disneyland operator Oriental Land 4661.T, 5.26% higher, and advertising giant Dentsu Group 4324.T, which gained 4.56%.

The largest losers were Yaskawa Electric 6506.T, down 9.91%, followed by Fujikura 5803.T, 5.25% lower, and Panasonic 6752.T, which lost 4.16%.