(Updates prices after BOJ decision)

By Kevin Buckland

TOKYO, Dec 19 (Reuters) - Japan's Nikkei share average

pared early declines on Thursday as the yen weakened following

the Bank of Japan's decision to refrain from raising interest

rates.

The yen fell despite widely-held market expectations that

Japan's central bank would push policy tightening to January or

March, and was down about 0.3% at 155.26 per dollar by 0340 GMT.

The Nikkei was trading 0.75% lower at 38,790.14

after finishing the morning session down 0.96%. The broader

Topix recovered from a 0.49% decline to last trade about

flat.

Japanese government bonds, however, largely shrugged off the

rate decision, with benchmark 10-year futures last down

0.30 yen at 142.08 yen, versus a 0.28 yen decline at the end of

morning trading. Cash 10-year JGBs had yet to

trade in the afternoon session.

The BOJ announcement came during the trading recess.

Investors now turn their attention to BOJ Governor Kazuo Ueda's

press conference, expected at 0630 GMT, for clues on the timing

of the next hike.

Japanese stocks had declined broadly in the morning following an

overnight sell-off on Wall Street after the U.S. Federal

Reserve's signal of a cautious pace of easing next year, even as

it cut the policy rate by a quarter point as expected.

"I would've thought that given the Fed's somewhat hawkish

statement, you could argue that that actually kind of helps the

BOJ to also provide a bit more of a hawkish guidance ... but

that didn't happen," said Alvin Tan, head of Asia FX strategy at

RBC Capital Markets in Singapore.

Looking ahead to Governor Ueda's news conference, "if he

remains noncommittal about imminent hikes, then I think that

would be unabashedly dovish," Tan said.

The Fed's hawkish stance sent U.S. Treasury yields soaring,

leading JGB yields to jump at the open as well.

As a result, the interest-rate sensitive real estate sector

was the worst-performer on the Nikkei, while financials were the

top performers.

Heavyweight chip-sector stocks were another big drag, with

Advantest ( ADTTF ) down 3% and Tokyo Electron ( TOELF ) losing

1.7%. Shares of artificial intelligence-focused startup investor

SoftBank Group tumbled 4.3%.

Overnight, shares in U.S. chipmaker Micron Technology ( MU )

slumped after the company's below-consensus profit and revenue

forecast pointed to sluggish global demand.