UPDATE 1-Nippon Steel unit says skipped tests on pipes

(Updates with announcement)

TOKYO, May 29 (Reuters) - A subsidiary of Nippon Steel Corp (5401.T), the world's second-biggest steel maker, said on Thursday it had failed to conduct required water pressure tests on steel pipes made for natural gas plants and bridges.

Nittai Corp, owned 60 percent by Nippon Steel, said it had skipped water tests on most of the 126,000 pipes made in the past five years at its Noda plant, near Tokyo, because the factory manager had feared conducting water pressure tests would slow production.

Nittai said that none of its clients had complained about the quality of the pipes, but it has halted shipments from the Noda plant and would suspend production from Thursday.

The announcement came a week after JFE Steel Corp, a unit of steel maker JFE Holdings Inc (5411.T), said it had failed to conduct water pressure tests on steel pipes mainly used for oil rigs.

Nippon Steel said in a statement it would review and improve the group's quality management.

Shares in Nippon Steel ended morning trade up 0.3 percent at 668 yen, despite an earlier report by the Yomiuri newspaper on the company's failure to conduct the tests. The benchmark Nikkei average .N225 was up 2.8 percent. (Reporting by Sachi Izumi)