Japanese stocks pare early gains ahead of Fed meeting

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Sept 20 (Reuters) – Japanese stocks marked slight gains in back-and-forth trading on Tuesday as investors braced for this week’s long-awaited U.S. Federal Reserve meeting, where the central bank is expected to announce another big rate hike to tackle inflation.

As markets resumed trading after a national holiday, the Nikkei share index opened 0.8% higher and rose as much as 1.23% before paring gains to finish up 0.42% at the break.

The broader Topix index added 0.43%.

Markets are fully pricing in a Fed rate hike of at least 75 basis points, with an 18% chance seen of a full percentage point rise.

“It would be a negative surprise for the market if a 100 bps rate hike was decided, and the Nikkei share average would likely test lower levels,” said a domestic asset manager.

The Nikkei saw 155 of its 225 constituents mark gains, while 67 fell and three traded flat.

The index’s climb was largely driven by technology stocks, in line with overnight results from the Nasdaq 100 and the Philadelphia semiconductor index.

Chipmaking equipment manufacturer Tokyo Electron Ltd rose 1.27% and tech conglomerate SoftBank Group Corp added 1.28%. Both are major contributors to the Nikkei.

Other strong tech performers included TDK Corp, Kyocera Corp and KDDI Corp.

Pacific Metals Co Ltd saw the biggest individual rise on the Nikkei, up 5.57%. Konami Group Corp notched the largest loss, falling 4.76%.

Healthcare was one of the few sectors to drop overall, tracking overnight losses on Wall Street. Kyowa Kirin Co Ltd lost 2.62%, M3 Inc dropped 2.37% and Terumo Corp fell 1.55%.

The real estate sector also weakened. Mitsui Fudosan Co Ltd dropped 2.10% and Tokyo Tatemono Co Ltd fell 1.93%. (Reporting by Sam Byford and Tokyo markets team; Editing by Devika Syamnath)

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