TOKYO, Aug 7 (Reuters) - Japan's Nikkei share average surrendered most of its early losses to trade flat on Monday, as investors took a fresh view on strong domestic corporate earnings, while drugmaker Astellas surged on U.S. approval of Izervay.

The Nikkei was flat by the midday break, down 0.01% at 32,190.31 after opening lower to track Wall Street's declines at the end of last week. The index fell 0.9% to hit its lowest since July 12 earlier in the session.

The broader Topix reversed course to gain 0.3% to 2,281.45

"The market tracked declines in the U.S. markets at the end of last week, while investors were not making active bets on stocks as they were not certain about where the Japanese government bond yields should stand," said Shuji Hosoi, senior strategist at Daiwa Securities.

The index narrowed its losses as investors confirmed improvement of Japanese firm's earnings per shares, Hosoi said.

"Companies, such as automakers, have raised their outlook," said Hosoi.

Wall Street closed lower on Friday, after a report of slowing U.S. labor market growth, and all three major indexes posted weekly losses as investors braced for more possible downside surprises a day after disappointing earnings from Apple.

In Japan, investors have been searching the fair value of the benchmark 10-year government bonds, after the Bank of Japan surprised the market to set a de-facto ceiling of the bond yield at 1% last month.

Astellas Pharma surged 8.61% to become the biggest support for the Nikkei, after U.S. Food and Drug Administration approved the drugmaker's Izervay for the treatment of age-related macular degeneration (AMD).

Its peer Daiichi Sankyo rose 1.14%.

Phone company KDDI rose 1.2% and medical equipment maker Terumo gained 1.64%.

Heavyweight technology stocks weighed on the Nikkei the most, with chip-related Tokyo Electron and Advantest falling 1.54% and 2.43%, respectively.

(Reporting by Junko Fujita; Editing by Rashmi Aich)