Tokyo stocks open slightly higher on yen's softer tone

Japan's Nikkei share average was almost flat on Wednesday morning after scaling more than two-year highs on the previous day, while investors stayed cautious before the U.S. Federal Reserve's policy meeting which ends later in the day.

The benchmark Nikkei 225 index was up 0.83 percent, or 169.42 points, at 20,479.88 by the break, while the broader Topix index advanced 0.71 percent, or 11.85 points, to 1,679.77.

BOJ policymakers are widely expected to reassure investors that the bank will lag well behind its USA counterpart in scaling back its massive stimulus as the modest economic recovery has yet to boost inflation anywhere near its 2 percent target.

Analysts said a gap between the policies of the main global central banks was pushing the yen down, as the BoJ hints it would keep its stimulus taps open while the US Federal Reserve has suggested a December rate hike.

"Since both USA and Japan's monetary decisions are out, investors have started taking profits a bit", said Yutaka Miura, a senior technical analyst at Mizuho Securities.

Banks were also higher, tracking rallies in the USA and European markets.

He said that since Japanese stocks tend to move in line with USA yields, and if they rise, Japanese financial companies, which invest in high-yielding products such as foreign bonds, will likely gain.

Government sources have told Reuters that Prime Minister Shinzo Abe is considering calling a snap election for as early as next month and will pledge to use some of the revenue from a scheduled sales tax hike in 2019 to fund spending on education and child care.

The Tokyo Stock Exchange's bank sub-index rose 1.0 percent.

Mitsubishi UFJ climbed 0.56 per cent to 723.5 yen, Sumitomo Mitsui Financial was up 0.46 per cent at 4,314 yen and Mizuho Financial rose 0.45 per cent to 199.1 yen.

Murata Manufacturing Co Ltd shed 1.1 percent, while Alps Electric Co Ltd tumbled 2.4 percent and Nitto Denko Corp dropped 2.6 percent.

Sony Corp declined 1.5 percent after Credit Suisse cut its rating to "neutral" from 'outperform, ' citing slow growth in its gaming business over the next few years.

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