* Exporters mixed as all eyes on BOJ meeting next week
* Speculation on possible BOJ actions may cause volatility - analyst
* Pharma stocks outperform
By Ayai Tomisawa
TOKYO, Sept 13 (Reuters) - Japanese stocks were flat Tuesday morning, unable to build on small opening gains after sliding to two-week lows the previous day as a solid yen sapped risk appetite.
The Nikkei opened slightly higher on the back of Wall Street's rally overnight, but pulled back to be flat at 16,676.74 in midmorning trade. On Monday, the benchmark index slumped 1.7 percent to its lowest since Aug. 26.
The bounce in the U.S. share market was spurred by Federal comments from Reserve Board Governor Lael Brainard, who stuck to her dovish stance on interest rates and urged caution about removing monetary stimulus too quickly.
Investors, however, remained cautious about investing in Japanese equities as a relatively stronger yen has raised concerns about exporters' earnings. The dollar was last around 101.66 yen from Monday's high of 102.82 yen.
The focus remains on next week's Bank Of Japan's policy review, which coincides with the Fed's. The BOJ is expected to announce the outcome of its comprehensive review of its policy.
BOJ sources have said the central bank is considering ways to steepen the yield curve as a means to reduce short-term costs for businesses while protecting Japanese banks.
"We don't know what the central bank will announce next week, and most of us are nervous. Most investors do not want to take positions now," said Isao Kubo, an equity strategist at Nissay Asset Management.
He said speculation over what the BOJ might do at next week's meeting could stoke market volatility.
More than half of the sectors were in negative territory, with banks underperforming. Mitsubishi UFJ Financial Group and Mizuho Financial Group shed 1.7 percent each.
Exporters were mixed, with Toyota Motor Corp flat, Honda Motor Co rising 0.5 percent and Panasonic Corp falling 0.9 percent.
Defensive stocks were in demand. Santen Pharmaceutical soared more than 5 percent after it announced a share buyback plan.
Takeda Pharmaceutical rose 0.7 percent and Astellas Pharma gained 1.0 percent.
The broader Topix dropped 0.3 percent to 1,319.75 and the JPX-Nikkei Index 400 shed 0.3 percent to 11,837.18.
Editing by Shri Navaratnam