TOKYO, Sept 2 (Reuters) - Japan's Nikkei share gauge

edged higher on Tuesday, snapping a two-day skid, as

anticipation of rate cuts from the Federal Reserve and positive

sales reports by department stores buoyed sentiment.

The Nikkei 225 Index struggled for direction, losing

as much as 0.25% at one point, but ended the day up 0.3% to

42,310.49. The broader Topix added 0.6%.

Trading was subdued after a market holiday in the United

States for Labour Day diminished trading cues. Ahead of key U.S.

jobs data on Friday, markets are showing an 89% chance the Fed

will reduce rates by 25 basis points (bp) at its next meeting.

‏"Japanese equities are finding some modest support,

partially because the market is pricing in a 25 bp Fed rate cut

in September, which is broadly positive for risk assets," said

Dilin Wu, a research strategist at Pepperstone. "However,

elevated Japanese government bond yields and spillover pressure

from U.S. tech stock sell-offs are keeping buyers cautious."

Takashimaya ( TKSHF ) and a unit of J.Front Retailing ( JFROF )

posted preliminary same-store sales figures for August

on Monday that showed the first year-on-year rise since

February.

Takashimaya ( TKSHF ) shares gained 3.3%, while J.Front advanced 4.3%.

Isetan Mitsukoshi ( IMHDF ), which narrowed its monthly sales

decline, surged 5.9%.

There were 166 advancers on the Nikkei index against 58

decliners.

After Isetan Mitsukoshi ( IMHDF ), the biggest gainer on the Nikkei

was beermaker Kirin Holdings ( KNBWF ), which rose 5.4%.

The largest losers on the index were online retailer Mercari ( MRCIF )

, which lost 4.8%, followed by Furukawa Electric ( FUWAF )

, which slid 3.4%.