(Updates prices)

By Kevin Buckland

TOKYO, March 27 (Reuters) - Japanese stocks advanced on

Wednesday as the yen sagged to its weakest since 1990, but

Chinese markets slipped and regional stocks overall lacked

strong direction in a holiday-shortened week that ends with a

key reading on U.S. inflation.

Japan's Nikkei finished the day up 0.9% at

40,762.73, bringing it close to the all-time high of 41,087.75

reached last Friday.

The yen weakened to as far as 151.975 to the dollar,

spurring an immediate warning from Japan's finance minister of

"decisive action," a phrase he last used in late 2022, ahead of

yen-buying intervention.

The yen has been sliding despite the Bank of Japan's first

interest rate hike for 17 years last week as traders expect very

gradual tightening and possible delays to long expected Federal

Reserve easing.

BOJ board member Naoki Tamura reinforced the dovish outlook

regarding further tightening on Wednesday, saying the central

bank should "move slowly but steadily toward policy

normalisation".

Meanwhile, Hong Kong's Hang Seng slumped 1% and

mainland Chinese blue chips lost about 0.7%, reversing

gains from the previous session.

Overall, MSCI's broadest index of Asia-Pacific shares

advanced 0.1%, but that flipped to a 0.17%

decline if Japanese shares were removed.

"It's choppy, directionless trading, and there's a good

reason for that: we've hit that time of the quarter when

rebalancing flows are impacting the market," said Tony Sycamore,

a strategist at IG.

Another reason is that two key events -- the release of the

U.S. Federal Reserve's favoured inflation indicator and public

comments from Fed Chair Jerome Powell -- come on Friday, when

most markets are closed for a holiday, he added.

Inflation data "have not been doing what's expected", and in

the event of a hot reading, "the bumpy road that the Fed has

been talking about suddenly starts to look more like a mountain

trek", Sycamore said.

The U.S. dollar index, which measures the currency

against six major peers, including the yen, was 0.07% higher at

104.36, taking it to just below Friday's five-week high of

104.49.

The dollar was last 0.06% stronger at 151.65 yen

"The very accommodative stance of BOJ and data that

continue to show the fragility of Japan's 'virtuous cycle'

economic recovery underscore the divergence in policy stances"

with the Fed, Westpac strategists wrote in a note.

"If intervention were to occur, resultant flushes in

USD/JPY below 150.00 are likely to be seen as buying

opportunities."

The euro was flat at $1.08285. Sterling

fell 0.12% to $1.26175.

U.S. long-term Treasury yields were stable

at 4.23%.

Traders are trying to gauge which of the big central banks -

the Fed, ECB or Bank of England - will be first to cut rates

this year.

Meanwhile, Sweden's Riksbank decides policy later in the

day, with a hold widely expected, but markets are looking at

hints for a cut by June.

Pan-European STOXX 50 futures pointed 0.12% lower,

while U.S. S&P 500 futures added 0.32%.

Gold was little changed at around $2,179 as it

continued to search for a short-term floor following its surge

to a record $2,222.39 on Thursday.

Cryptocurrency bitcoin added 0.5% to $70,167.

Crude oil fell for a second day after a report that crude

stockpiles surged in the U.S., the world's biggest oil user, and

on signs major producers are unlikely to change their output

policy at a technical meeting next week.

Brent crude futures for May dropped 74 cents, or

0.9%, to $85.51 a barrel. The May contract is set to expire on

Thursday and the more actively traded June contract

declined 68 cents, or 0.8%, at $84.95.

U.S. West Texas Intermediate (WTI) crude futures

for May delivery fell 64 cents, or 0.8%, at $80.98.