UPDATE 1-Sony PS3 catching up to Wii in Japanese sales

(Recasts, adds details, background, closing share prices)

TOKYO, July 3 (Reuters) - Nintendo Co Ltd's (7974.OS) Wii game console once again outsold Sony Corp's (6758.T) PlayStation 3 in Japan in June, but its lead is fading, a game magazine publisher said.

Wii outsold the rival console by 1.7-to-1, making it the No.1 game console for a seventh consecutive month, Enterbrain said, but that was well short of the 6-to-1 lead the Wii had in May.

The launch in June of Konami Corp's (9766.T) highly anticipated "Metal Gear Solid 4" for the PS3 helped stir demand for the Sony machine, the magazine said.

Nintendo sold 235,990 units of its Wii console in the five weeks ended June 29, while sales of the PS3 came to 139,494 units, Enterbrain said. Microsoft Corp's (MSFT.O) Xbox 360 trails the pack, with sales of 10,964 units.

Despite its strong performance in June, the PS3 has a lot of catching up to do in total sales around the world.

Sony has sold 12.85 million units of its latest console worldwide by the end of March, or just half the Wiis sold since the rival consoles were both launched in late 2006.

For handheld game players, Sony sold 274,131 of its PlayStation Portable during the five-week period, surpassing Nintendo, which sold 195,714 of its DS gear, the publisher said.

Prior to the announcement, shares in Sony closed up 0.9 percent at 4,600 yen while Nintendo gained 0.2 percent to 60,900 yen. The Nikkei average .N225 was down 0.2 percent. (Reporting by Kiyoshi Takenaka; Editing by Rodney Joyce)