July 29, 2016 / 1:47 AM / in 2 years

Nikkei dips on stronger yen, jitters ahead of BOJ decision

* Nikkei down 0.1 pct, Topix slips 0.3 pct

* Yen hits 2-1/2-week high vs dollar, weighs on Nikkei

* Market wary before BOJ decision amid entrenched easing hopes

By Shinichi Saoshiro

TOKYO, July 29 (Reuters) - Japan’s Nikkei share average dipped on Friday, weighed down by a stronger yen and uncertainty over whether the Bank of Japan will ease policy later in the day.

The Nikkei was down 0.1 percent at 16,458.93 points by mid-morning.

The index had risen to a seven-week high of 16,938.96 last week, helped by expectations that Japan’s government and central bank would offer a double dose of fiscal and monetary stimulus.

With the government already poised to launch a large fiscal stimulus package next week, the focus has turned to the central bank and whether it will match Tokyo’s spending with monetary easing.

Traders widely expect the BOJ to increase its already massive purchases of government bonds and some riskier assets such as ETFs and possibly REITs. It may also cut interest rates deeper into negative territory, which could hit banking stocks.

But market expectations are so high, that even those measures may not be enough to slow yen gains for long.

“The market’s expectations towards the BOJ easing policy are strong, but it has to wait until the central bank’s actual announcement, with the stronger yen dictating moves until then,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.

The dollar was down 0.8 percent at 104.41 yen after touching 103.30, its lowest in 2-1/2 weeks.

Sony Corp was up 2.2 percent after the electronics conglomerate said on Thursday it has agreed to sell a portion of its batter business to Murata Manufacturing Co Ltd in response to a slowing demand for smartphones.

Murata fell 2.6 percent after it said its operating profit for April-June dropped 23.9 percent on the year.

Nomura Holdings rose 6.7 percent after the company said on Thursday it will buy back up to 2.6 percent of its own shares.

Another gainer following a share buy back announcement was Fujikura Ltd, which rose 9.9 percent. The manufacturer of electrical equipment and communications systems will buy back up to 3.39 percent of its own shares.

The broader Topix slipped 0.3 percent to 1,303.39 and the JPX-Nikkei Index 400 was down 0.2 percent at 11,723.79. (Editing by Kim Coghill)

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