TOKYO, Dec 18 (Reuters) - Japan's Nikkei share average

fell on Wednesday, as technology stocks tracked Wall Street's

weak finish overnight, while a report of a Honda-Nissan tie-up

boosted auto shares.

The Nikkei had slipped 0.21% to 39,281.06 by the

midday break and was on track for a fourth straight session of

declines.

U.S. stocks retreated on Tuesday and the Dow dropped for a

ninth straight session, as investors exercised caution ahead of

the Federal Reserve's last policy announcement of the year after

economic data indicated consumer spending remained solid.

Technology start-up investor SoftBank Group fell

3.43% and chip-making equipment maker Tokyo Electron ( TOELF )

inched down 0.25%.

The broader Topix edged up 0.12% to 2,731.48, with

the auto sector rising 1.58% to become the top gainer

among the Tokyo Stock Exchange's 33 industry sub-indexes.

Honda Motor ( HMC ) and Nissan Motor ( NSANF ) are moving

towards a closer tie-up with talks of setting up a holding

company, a source said, in the clearest sign yet of

reorganisation in Japan's auto industry in response to immense

challenges posed by Tesla and Chinese rivals.

"The report raised expectations that Japan's automakers will

start a consolidation and investors were prompted to buy auto

shares," said Fumio Matsumoto, chief strategist at Okasan

Securities.

"The market did not expect the closer tie-up between Nissan ( NSANF )

and Honda ( HMC ) would take place this early. Now, investors expect

less competitive automakers, such as Mazda ( MZDAF ), may be a target for

an acquisition."

Shares of Nissan ( NSANF ) surged 22%, while those of Honda ( HMC ) rose 2.3%.

Mitsubishi Motors ( MMTOF ) jumped 13% and Mazda Motor ( MZDAF )

gained 3.86%.

Okasan's Matsumoto said the Nikkei's gains would be limited

toward the end of the year, with foreign investors going on

holidays.

"But losses will be limited as well, because of the share

buybacks by Japanese firms," he said.

(Reporting by Junko Fujita; Editing by Subhranshu Sahu)