* Nikkei erases losses after BOJ’s policy decision
* Topix fall as bank stocks sink on profit-taking
* Positive earnings reports lend some support to shares
By Tomo Uetake
TOKYO, July 31 (Reuters) - Japan’s Nikkei share average ended flat after choppy moves on Tuesday, rebounding from a one-week low after the Bank of Japan announced tweaks to its monetary policy settings but refrained from making any radical move off its ultra-easy policy stance.
The benchmark Nikkei inched up 0.04 percent to 22,553.72 but the broader Topix fell 0.84 percent to 1,753.29 as bank shares fell on profit-taking after the BOJ’s announcement.
The BOJ pledged to keep interest rates “very low” for the time being and took measures to make its massive stimulus programme more flexible, reflecting its forecast that it would take time for inflation to hit its 2 percent target.
Bank shares dropped 2.8 percent to become one of the worst performing sectors as Japanese bond yields fell after the BOJ’s announcement.
“For people who have bought bank shares on expectations that the BOJ will redress the side-effects of its easing, today’s announcements perhaps fell short of their expectations,” said Tetsuro Ii, chief executive officer at Commons Asset Management.
“But I wouldn’t say it was a disappointment. It’s just that excessive expectations have retreated. As we don’t know yet how much flexibility it plans to allow, we’ll have to see comments from Governor (Haruhiko) Kuroda, Deputy Governor (Masayoshi) Amamiya and the BOJ’s operations.”
As widely expected, the BOJ also announced it will shift its stock ETF buying more to the Topix-linked ETFs from those tied to the Nikkei.
Fast Retailing, which has about 8 percent weighting in the Nikkei and had been sold off on expectations of a BOJ shift over the past week, rose 2.1 percent.
Positive earnings reports also lent some support to stocks.
Capcom jumped 6.6 percent to its highest level in 18 years after the game maker’s net profit for the April-June quarter grew 7.5 times from a year earlier, thanks to the success of “Monster Hunter”.
Fancl Corp, TDK Corp and Oriental Land climbed between 4.1 and 5.4 percent after the companies announced upbeat quarterly results.
Gurunavi soared 17.5 percent to its daily-limit high after e-commerce firm Rakuten announced a tie-up with the restaurant finder site after the market close on Monday.
Rakuten added 1.0 percent.
Still, a continued tech sell-off on Wall Street soured investors’ sentiment, said Yasuo Sakuma, chief investment officer at Libra Investments.
Overnight, a widespread sell-off of technology stocks pushed the three major U.S. stock indexes lower, with the Nasdaq Composite posting its third consecutive loss of more than 1 percent for the first time in three years.
The main board’s turnover hit a two-month high of 3.26 trillion yen ($29.33 billion). ($1 = 111.1400 yen) (Reporting by Tomo Uetake; Editing by Shri Navaratnam and Richard Borsuk)