TOKYO, Jan 13 (Reuters) - Japan"s Nikkei share average dropped on Thursday, as a jump in COVID-19 cases spurred a sell-off in retailers and other service providers, with technology stocks also witnessing a slide. The Nikkei (.N225) shed 0.96% to 28,489.13 by the close. The broader Topix (.TOPX) fell 0.68%. Japan recorded a surge in new COVID-19 cases on Wednesday, with infections reaching four-month highs in the major metropolitan areas of Tokyo and Osaka as the Omicron variant spreads. Chief Cabinet Secretary Hirokazu Matsuno said the nation "must brace for the rapid spread of infections to continue." read more Retail conglomerate Aeon (8267.T) and cinema operator Toho (9602.T) were among the Nikkei"s biggest losers, dropping 5.70% and 5.50% respectively. Uniqlo store operator Fast Retailing (9983.T) slumped 1.92%, making it the biggest decliner by index points. "Investors are starting to think that economic normalization will be delayed, and that"s weighing on sentiment," said a market participant at a domestic securities firm. The tech sector tumbled despite starting the day in positive territory. Electrical equipment maker YASKAWA lost 6.29%, making it the Nikkei"s biggest percentage decliner on the day. Olympus (7733.T) shed 4.99%. The Topix precision machinery subindex (.IPRCS.T) was the biggest loser, down 3.63% and hitting its lowest since July. The subindex attempted a rebound on Wednesday, but that left it with little headroom for gains this session, said a market participant at a domestic asset management firm. The Nikkei"s big chipmakers, though, traded higher, with Advantest jumping 1.58% and Tokyo Electron (8035.T) rebounding from earlier losses to end 0.35% higher, supported by record profit at Taiwanese peer TSMC and a rise among U.S. counterparts overnight, when the Philadelphia SE Semiconductor Index (.SOX) rose 0.66%. Subindexes for retailers (.IRETL.T) and services (.ISVCS.T) rounded out the Topix"s bottom three, falling 2.30% and 2.16% respectively. At the other end, iron and steel"s (.ISTEL.T) 3.33% rally made it the best-performing Topix subindex, amid strong commodity prices. Pacific Metals (5541.T) posted the Nikkei"s biggest percentage advance, jumping 6.64%, followed by Toho Zinc (5707.T), Sumitomo Metal Mining and Nippon Steel . Among other notable winners was Toyota Motor (7203.T), with a 2.23% gain.