TOKYO, Jan. 12 (Xinhua) -- Japan's benchmark Nikkei stock index ended essentially flat Thursday, amid caution ahead of U.S. inflation data and on speculation that the Bank of Japan may review the side effects of its ultra-loose monetary policy.
The 225-issue Nikkei Stock Average inched up 3.82 points, or 0.01 percent, from Wednesday to close the day at 26,449.82.
The broader Topix index, meanwhile, added 6.93 points, or 0.36 percent, to finish at 1,908.18.
Overall sentiment was inherited from Wall Street's upbeat lead, buoyed by expectations that slowing inflation could lead to the U.S. Federal Reserve's easing back on its aggressive interest rate hikes.
"Investors refrained from active trading as they wanted to see how the CPI data turn out, although slowing inflation is widely expected," Nobuhiko Kuramochi, senior strategist at Mizuho Securities, was quoted as saying.
Other strategists said although the market's topside remained heavy, the bottom was also firm and overall Japanese stocks were being supported.
"The topside is heavy, with investors' fine-tuning positions ahead of the CPI report," Maki Sawada, a strategist at Nomura Securities, was quoted as saying.
"At the same time, the bottom also seems quite firm. The market's expectation that the U.S. economy can navigate a soft rather than hard landing is supporting stocks, including in Japan," Sawada said.
Following a news report that the Bank of Japan officials plan to review the side effects of its ultra-loose monetary policy at its two-day policy setting meeting next week, the yen firmed, although banking stocks gained, analysts pointed out.
Among banking issues finding favor, Sumitomo Mitsui Financial Group climbed 4.4 percent, while Mizuho Financial Group jumped 5.4 percent.
Export-oriented issues came under pressure, however, as the yen firmed against the U.S. dollar.
Exporters typically rely on a weak yen to boost profits made overseas when repatriated and enhance overall price competitiveness in foreign markets.
"One of the things that have kept earnings from collapsing in Japan has been the weaker yen," Amir Anvarzadeh, a market strategist at Asymmetric Advisors, was quoted as saying.
"Now that the yen is going back the other way, the rug is going to be pulled under the feet of manufacturers with big overseas earnings, particularly the multinationals," he said.
Exporters losing ground included Subaru reversing 1.9 percent, while game and console maker Nintendo dropped 1.8 percent.
Nikkei's heavyweight Fast Retailing, operator of the Uniqlo chain of clothing stores, weighed on the broader market, ending the day 2 percent lower.
Real estate issues lost ground on concerns that the BOJ's lifting of its interest rates would make mortgages more expensive and could impact demand.
Among these, Mitsui Fudosan dropped 2.5 percent.
By the close of play, bank, nonferrous metal and insurance issues comprised those that gained the most.
Declining issues outpaced rising ones by 1,002 to 742, while 94 ended the day unchanged.
On the Prime Market on Thursday, a total of 1,238.92 million shares changed hands, rising from Wednesday's volume of 1,058.87 million shares.
The turnover on the penultimate trading day of the week came to 2,801.81 billion yen (21.27 billion U.S. dollars). ■