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

was set for its third consecutive day of declines on Wednesday,

as investors assessed the likelihood of a policy shift at the

upcoming Bank of Japan monetary policy meeting.

The Nikkei was down 0.42% at 38,636.12 by the midday

break, retreating after briefly surpassing the psychologically

significant 39,000 level.

The broader Topix was down 0.39% at 2,646.99.

Market players were trading with caution ahead of the BOJ's

policy meeting, with many expecting Japan's central bank to lift

short-term interest rates from negative territory either next

week or by April.

Among index heavyweights, chip-making equipment giant Tokyo

Electron ( TOELF ) advanced 1%, followed by a 0.8% increase in

Honda Motor ( HMC ).

However, 140 of the index's 225 constituents declined, with

losses in major shares such as SoftBank Group, down

0.8%, and Uniqlo parent company Fast Retailing ( FRCOF ), which

fell 0.3%, eroding early gains.

Electrical equipment manufacturer Daikin Industries ( DKILF )

topped heavyweight declines, losing 2.6%.

The yen strengthened in the Asian morning, weighing on

exporters that benefit from a weaker currency, as traders

awaited the initial results of the closely watched spring wage

negotiations, due out on Friday.

Toyota Motors was down about 1%.

"If a higher rate of wage increases than last year is

confirmed, views that the BOJ will exit from negative interest

rates at the March meeting will strengthen," said Maki Sawada, a

strategist at the investment content department of Nomura

Securities.

In that case, "the appreciation of the yen against other

currencies will likely weigh on stock price," she added.