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

rebounded on Wednesday, supported by a softer yen and a recovery

among chip-related stocks, although moves were subdued ahead of

the Federal Reserve's long-awaited monetary policy decision.

The Nikkei was up 0.7% at 36,461.44 by the midday

break, after sliding in the previous two sessions on a stronger

yen, while the broader Topix rose 0.4% to 2,565.25.

In a boost to export shares, which benefit from a softer

domestic currency, the yen hovered around 142.02 per dollar

earlier in the session. The currency strengthened to

below 140 in a holiday-thinned Asia session on Monday.

Automakers, in particular, stood out after investors picked

up big names knocked down by the yen's recent gains, with shares

of Toyota Motor ( TM ) climbing about 3%, Mazda Motor ( MZDAF )

adding 3.5%, and Honda Motor ( HMC ) up 2.1%.

Among the Tokyo Stock Exchange's 33 industry groupings,

transport equipment, which includes automakers, rose

2.2% to become the top performing sector.

Technology stocks also saw buying on the dip, lifting

AI-focused startup investor SoftBank Group and

chip-testing equipment maker Advantest ( ADTTF ) up 0.9% and

1.6%, respectively.

But gains narrowed as the yen recouped some of the early

losses during morning trade. Investors are waiting to see

whether the U.S. Fed will cut interest rates by 25 or 50 basis

points at the conclusion of its meeting later in the day.

Markets have gone from expecting a moderate cut to pricing

in a 65% chance the Fed will reduce interest rates by 50 basis

points, up from 35% a week earlier, according to the CME's

FedWatch Tool.

It's expected that the yen might weaken against the dollar

if the rate cut is smaller than the super-sized cut currently

priced in, said Kazuo Kamitani, an equities strategist at Nomura

Securities.

"I think this scenario is likely, but ... the market is

currently cautious considering that (the foreign exchange rate)

might become a bit turbulent."

Among other heavyweights, shares of Uniqlo parent firm Fast

Retailing ( FRCOF ) were up 2.4% to give the Nikkei its biggest

lift.