TOKYO, Jan 17 (Reuters) - Japan's Nikkei share average

fell on Friday amid caution ahead of market reaction to

President-elect Donald Trump's inaugural speech next week, while

a stronger yen hurt exporters' shares.

The Nikkei shed 0.98% to 38,193.05 by the midday

break and was set to fall 1.58% for the week.

"What's behind the market declines is a concern about a

reaction to the comments from Trump who is due to be inaugurated

on Monday. Investors do not want to take risks for a possible

big swing in the market," said Hiroyuki Ueno, chief strategist

at Sumitomo Mitsui Trust Asset Management.

Japanese equities fell as the yen strengthened on hopes that

the Bank of Japan (BOJ) will raise its policy rate next week.

"The interest rate hike next week seems to be almost certain

but the BOJ's future rate path is not clear yet. It is natural

for investors to cut their positions under these circumstances,"

said Ueno.

The yen climbed 1.5% against the U.S. dollar this week, the

strongest weekly run since late November 2024.

A stronger yen tends to hurt exporters' shares as it

decreases the value of overseas profits in yen terms when firms

repatriate them to Japan.

Chip-testing equipment maker Advantest ( ADTTF ) lost 2.33%

to drag the Nikkei the most. Uniqlo clothing store operator Fast

Retailing ( FRCOF ) slipped 0.91%.

The broader Topix fell 1% to 2,661.47, dragged lower

by Nintendo's ( NTDOF ) 5.75% fall. The gaming company on

Thursday said it would release the Switch 2 console this year.

Bank shares fell, with Mitsubishi UFJ Financial Group ( MUFG )

and Sumitomo Mitsui Financial Group ( SMFG ) losing

2.62% and 2.39%, respectively.

The Topix's banking index lost 2.31%.

Air conditioner maker Daikin Industries ( DKILF ) rose 1.32%

to lend the biggest boost to the Nikkei.

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

Exchange's prime market, 23% rose, 73% fell and 2% traded flat.