(Updates at 0600 GMT)

TOKYO, June 13 (Reuters) - Japan's Nikkei share average

fell on Thursday, reversing early gains amid caution around the

Bank of Japan's policy decision due Friday.

The Nikkei closed 0.4% lower at 38,720.47, after

rising nearly 1% to cross the 39,000 level earlier in the

session as chip-related stocks tracked their U.S. peers.

Of the 225 Nikkei components, 44 stocks rose and 181 fell.

The broader Topix also gave up early gains, ending

0.89% lower at 2,731.78.

"The market was weaker than expected," said Shuji Hosoi,

senior strategist at Daiwa Securities.

"The Nikkei was barely in the positive territory earlier in

the session supported by gains of chip-related stocks."

Shares of chip-testing equipment maker Advantest ( ADTTF )

rose 1.54% and was the biggest support for the Nikkei, tracking

overnight gains in the U.S. semiconductor index.

However, chip-making equipment maker Tokyo Electron ( TOELF )

fell 1.66%, dragging the Nikkei the most.

Toyota Motor ( TM ) lost 2.52% and was the biggest drag

for the Topix.

Trading firm Mitsubishi Corp ( MSBHF ) slipped 2.45%.

The BOJ will conclude its two-day policy meeting on Friday,

where it is expected to keep interest rates steady and consider

whether to offer a clearer guidance on how it plans to reduce

its huge balance sheet.

"The market has already taken into account that the BOJ will

reduce the bond buying amounts, so the market reaction after the

policy meeting is expected to be limited," said Daiwa's Hosoi.

The BOJ will consider trimming its bond buying at the

meeting ending on Friday, the Nikkei newspaper reported, taking

a first key step to reducing its almost $5 trillion balance

sheet.

(Reporting by Junko Fujita; Editing by Varun H K)