(Updates with closing levels)

TOKYO, Aug 1 (Reuters) - Japan's Nikkei share average

declined on Thursday as the yen rallied further following the

Bank of Japan's (BOJ) historic monetary policy meeting on

Wednesday, while index heavyweights tumbled.

The BOJ raised interest rates to levels unseen in 15 years

and announced details on how it will reduce its huge bond

buying.

The market didn't appear to judge the decision as "too

hawkish," and the policy uncertainty that was hanging over the

market has been lifted, said David Chao, global market

strategist, Asia Pacific (ex-Japan) at Invesco.

But the yen climbed to its highest since mid-March at

148.51 per dollar on Thursday on the back of the BOJ's decision,

after having already recovered from a 38-year low hit in the

beginning of July, rattling investors.

"As soon as the yen rose above 150 to the dollar, the market

got concerned about the upside of local firms' profit outlook,"

said Masahiro Ichikawa, chief market strategist at Sumitomo

Mitsui DS Asset Management.

The Nikkei briefly fell over 3% before reversing

some losses and closing down 2.49% at 38,126.33, snapping three

consecutive days of gains.

The broader Topix slid 3.24% to 2,703.69, marking

its worst daily performance since March 2020.

Among the worst-hit were stocks of export-related companies,

which tend to suffer from a stronger yen when firms repatriate

revenues. Fast Retailing ( FRCOF ), declined 1.3%, and Sony Group

Corp ( SONY ), fell 3.3%.

"Japanese equities are likely to remain volatile in the

short term until we see a stabilization in the USDJPY

(dollar/yen)," UBS SuMi TRUST Wealth Management CIO wrote in a

note.

Among individual stocks, earnings releases drew out big

winners and losers, with Advantest ( ADTTF ) soaring 13.8% after

the firm lifted its full-year operating profit forecast by 53%

on Wednesday.

Toyota Motor ( TM ) declined 8.48% to become one of the

biggest drags on the Nikkei, after investors were unimpressed

with the 17% rise in first-quarter operating profit the

automaker announced during trading.

The transport equipment sector, which includes

major automakers, fell 6.6%.

(Reporting by Brigid Riley and Junko Fujita in Tokyo, Vidya

Ranganathan in Singapore; Editing by Subhranshu Sahu, Sonia

Cheema and Varun H K)