TOKYO: Japan’s Nikkei share average surrendered early gains to trade lower on Thursday ahead of the Bank of Japan’s policy decision due Friday.

The Nikkei was down 0.12% to 38,831.36 by the midday break, after rising nearly 1% to cross the 39,000 level earlier in the session as chip-related stocks tracked their US peers.

The broader Topix also reversed gains to fall 0.62% to 2,738,73.

“The market was weaker than expected,” said Shuji Hosoi, senior strategist at Daiwa Securities.

“The Nikkei was barely in the positive territory earlier in the session supported by gains of chip-related stocks.” Shares of chip-testing equipment maker Advantest rose 2.39% to track the US semiconductor index’s 2.9% gain overnight.

Advantest was the biggest support for the Nikkei. On the contrary, chip-making equipment maker Tokyo Electron gave up early gains to 0.87%, dragging the Nikkei the most.

Toyota Motor lost 1.87% and was the biggest drag for the Topix.

Trading firm Mitsubishi Corp slipped 2.76%.

The BOJ will conclude its two-day policy meeting on Friday, where it is expected to keep interest rates steady and consider whether to offer clearer guidance on how it plans to reduce its huge balance sheet.

“The market has already taken into account that the BOJ will reduce the bond buying amounts, so the market reaction after the policy meeting is expected to be limited,” said Daiwa’s Hosoi.

Tokyo shares end down ahead of US inflation data

The BOJ will consider will consider trimming its bond buying at the meeting ending on Friday, the Nikkei newspaper reported, taking a first key step to reducing its almost $5 trillion balance sheet.

Of the 225 Nikkei components, 45 stocks rose and 179 fell, while one was flat.