(Updates with details, comments and closing prices)

TOKYO, Jan 21 (Reuters) - Japan's Nikkei share average

ended higher in volatile trading on Tuesday, as investors found

comfort in the possibility of a delay in tariff implementation

by U.S. President Donald Trump.

The Nikkei closed 0.32% higher at 39,027.98, after rising as

much as 0.86% earlier in the session.

The index flitted in and out of positive territory in early

Asian hours. It also dropped about 0.66% after Trump said he was

considering imposing 25% tariffs on Mexico and Canada as soon as

Feb. 1.

"After all, the issue about the new tariff was not new so the

Nikkei's gains and declines were both limited," said Naoki

Fujiwara, senior fund manager at Shinkin Asset Management.

The broader Topix ended flat at 2,713.5.

Uniqlo-brand owner Fast Retailing ( FRCOF ) rose 1.09% to

provide the biggest boost to the Nikkei. Shares of chip-making

equipment maker Tokyo Electron ( TOELF ) ended 1.44% higher.

Drugmaker Chugai Pharmaceutical fell 1.79% to be

the biggest drag in the benchmark index.

"The market is expected to remain volatile like this for a

while as investors monitor outcome of the negotiations on the

tariffs. The political factor will become a key for the

equities," said Hiroyuki Ueno, chief strategist at Sumitomo

Mitsui Trust Asset Management.

Investors also await the Bank of Japan's policy decision,

due on Friday.

"Investors are seeking to know the pace of the BOJ's rate

hike," said Yugo Tsuboi, chief strategist at Daiwa Securities.

The BOJ is expected to raise interest rates in a move that

would lift short-term borrowing costs to levels unseen since the

2008 global financial crisis.

Of more than 1,600 stocks trading on the Tokyo Stock

Exchange's prime market, 56% of shares rose and 37% declined,

with 5% trading flat.