TOKYO, Dec 19 (Reuters) - Japan's Nikkei share average edged higher in Tuesday's morning session as investors were wary ahead of a looming Bank of Japan (BOJ) policy decision, with the focus on when the central bank would lift negative interest rates.
The Nikkei rose 0.15% to 32,808.70 as of 0210 GMT, after flipping several times between small gains and losses.
The broader Topix slipped 0.21%.
"It's the calm before the storm - that's the situation in the market," said Kazuo Kamitani, a strategist at Nomura Securities.
"Everything depends on the BOJ. Ultimately, the focus has to be there, that's just the kind of day this is going to be."
The BOJ doesn't have a set time for announcing its policy decision, but recently it has come around 12:30 pm local time (0330 GMT), when the stock market reopens from the midday recess.
Although economists don't expect an imminent policy change, policy makers have been laying the groundwork for an exit from negative rates, and some traders are wary of a move at the January meeting.
The BOJ also has a penchant for springing surprises. In July, it abruptly relaxed its grip on long-term borrowing costs, and then unexpectedly watered down those yield curve controls further in October.
BOJ Governor Kazuo Ueda holds a news conference at 03:30 pm local time, half an hour after the stock market close.
Benchmark 10-year Japanese government bond yields edged up as much as 2 basis points to 0.68% on Tuesday ahead of the policy announcement.
The yen strengthened slightly to 142.48 per dollar, although that was well back from Thursday's 5 1/2-month peak at 140.95.
Exporter stocks, which are sensitive to fluctuations in the exchange rate, were generally weaker. Toyota Motor lost 0.44% and Mazda slid 0.72%. Sony Group sank 1.03%.
Nippon Steel dropped 3.24% after the steelmaker clinched a deal to buy U.S. Steel for $14.9 billion, a 142% premium.
That made iron and steel the worst performer among the Tokyo Stock Exchange's 33 industry groups, declining 1.65%.
Airlines and railways were not far behind, each falling more than 1.4%.
At the other end, chip-related shares outperformed on the Nikkei, making up three of the index's top four supports.
Chip-testing equipment giant Tokyo Electron added a leading 36 index points with a 1.52% gain. Lasertec was also in the group with a 3.5% jump, as was Advantest, which rose 1.07%.
The other major support was Uniqlo store owner Fast Retailing, which enjoys a particularly heavy weighting on the Nikkei. Shares added 0.82%.
Of the Nikkei's 225 components, 78 rose versus 143 decliners, with four flat. (Reporting by Kevin Buckland; Editing by Rashmi Aich)
