(Updates with closing prices)

TOKYO, March 28 (Reuters) - Japan's Nikkei share average

fell on Thursday as numerous stocks were discounted for dividend

rights before the fiscal year end, while caution over a

potential currency intervention to shore up the yen also weighed

on sentiment.

The Nikkei ended down 1.46% at 40,168.07, with 202

of its 225 components falling versus just 23 that rose. The

index is, however, still set for a 20% jump in the January-March

quarter.

The broader Topix slid 1.73% to 2,750.81.

"The market is cautious about a possible currency

intervention. It is not clear at which level and when the

Japanese government will step in," said Shuji Hosoi, a senior

strategist at Daiwa Securities.

"Foreign investors are eager to buy Japanese stocks but they

want to buy them cheap. So they are monitoring how far the yen

is allowed to fall."

The yen fell to a 34-year low against the dollar

on Wednesday, prompting Japan's three main monetary authorities

to hold an emergency meeting to discuss the weak yen.

In a briefing afterwards, top currency diplomat Masato Kanda

said he "won't rule out any steps to respond to disorderly FX

moves."

The yen was last traded at 151.375 against the dollar

.

On Thursday, the Nikkei was also dragged lower by a number

of stocks going ex-dividend, losing about 260 points because of

that, strategists said.

Chip-sector shares had outsized losses. Silicon producer

Shi-Etsu Chemical was the Nikkei's biggest drag with a

3.12% slump.

Chip-testing equipment maker Advantest ( ADTTF ) fell 1.62%

to be no. 2, while chip-making equipment maker Tokyo Electron ( TOELF )

rounded out the bottom three with a 0.63% slide.

Uniqlo-brand owner Fast Retailing ( FRCOF ) slipped 0.47%.

All but one of the 33 industry sub-indexes on the Tokyo

Stock Exchange fell, with paper makers plunging 6.07%

to become the worst performer.

Mining rose 0.87%.