By Joshua Hunt

TOKYO, March 31 (Reuters) - Japanese stocks were flat on Thursday morning as a stronger yen trimmed the profit outlook for exporters and domestic retailers, sapping what little risk appetite investors had left on the final day of Japan's financial year.

"In U.S. dollar terms, Japan is significantly underperforming versus the U.S. and some of that may have to do with the fact that it's the end of a financial year and the end of a financial quarter that has been particularly harrowing," said Stefan Worrall, director of Japan equities at Credit Suisse.

"So much money in Japan is institutional and for that reason institutional frames of mind prevail, which can cause things to slow down at certain times of year."

The Nikkei share average edged up 0.1 percent to end the morning session at 16,890.04. Japan's benchmark index is on course to shed more than 11 percent during the financial quarter ending today.

"Recently 17,000 points has been a support level for the Nikkei but right now it's kind of yolked by the yen's strength, which isn't very surprising given the dollar's weakness," said Gavin Parry, managing director at Parry International Trading.

The Topix subindex for retailers shed 1.4 percent to end the morning session among the worst-performing sectors.

Sharp Corp fell 3 percent in volatile trade after Nomura Securities downgraded its stock to "reduce" from a previous rating of "neutral." Nomura cut its forecast of Sharp's earnings based on stiffening competition in the LCD business. The troubled electronics maker's stock is on track to gain more than 5 percent this quarter, despite volatile swings throughout takeover negotiations with Taiwan's Foxconn.

Shares of Sun Corp bucked the weakness and climbed 3.1 percent, adding to earlier gains that came after reports that the company's Israel-based unit Cellebrite helped the FBI access a locked iPhone used by one of the San Bernardino, California shooters. The company's stock is set to gain more than 50 percent for the quarter.

The broader Topix edged up 0.1 percent to 1,356.35 and remains on track to end the quarter about 12 percent lower.

The JPX-Nikkei Index 400 ended the morning session flat at 12,247.42.

(Reporting by Joshua Hunt; Editing by Simon Cameron-Moore)