* Land deal scandal caps upside in Japanese equities - analysts
* Toshiba rises more than 5 pct after Kyodo report
* Exporters under pressure from flat dollar/yen
By Ayai Tomisawa
TOKYO, March 17 (Reuters) - Japan’s Nikkei share average edged down on Friday morning, as the yen held steady against the dollar after the U.S. Federal Reserve signalled fewer interest rate hikes than some investors had expected.
The Nikkei shed 0.3 percent to 19,523.27 in mid-morning trade, with the index heading to a weekly loss for the first time in three weeks ahead of the three-day weekend. The Nikkei has fallen 0.4 percent so far this week.
Markets are closed on Monday for a national holiday.
Traders said that also capping the upside in the market is a land deal scandal involving Osaka-based Moritomo Gakuen, a nationalist private educational entity that is chipping away at the government’s support ratings.
Chief Cabinet Secretary Yoshihide Suga said that Japanese Prime Minister Shinzo Abe did not donate money to the operator of the school. Abe has denied that either he or his wife intervened in a murky land deal by the operator of the school, whose curriculum includes prewar-style patriotic education, or in the process of getting accreditation by local authorities.
But after weeks of resisting, Abe’s ruling party agreed on Thursday to an opposition demand to summon the principal, Yasunori Kagoike, as a sworn witness to testify in parliament on March 23, parliamentary sources said.
“We didn’t expect a testimony in parliament, so this bit of news has escalated a level of concern,” said Takuya Takahashi, a strategist at Daiwa Securities. “This scandal hasn’t directly hit trading activity so far, but the new development (testimony) is capping the upside in Japanese equities.”
Exporters were pressured as the dollar was flat against the yen on the day at 113.35.
Toyota Motor Corp fell 1.2 percent, Honda Motor Co shed 0.7 percent and Tokyo Electron Ltd slid 0.8 percent.
Toshiba Corp bucked the weakness and rose more than 5 percent after Kyodo reported that Japan’s industry minister said that he had agreed with the U.S. energy and commerce secretaries to share information on developments involving Toshiba and its troubled U.S. nuclear affiliate, Westinghouse Electric Co.
“When there is a news report like this saying there will be cooperation on a national level, retail investors’ sentiment in the stock recovers,” said Masayuki Doshida, senior market analyst at Rakuten Securities.
The broader Topix dropped 0.5 percent to 1,565.24 and the JPX-Nikkei Index 400 declined 0.5 percent to 14,017.74. (Editing by Jacqueline Wong)