(Updates prices following BOJ policy decision)

By Kevin Buckland

TOKYO, July 31 (Reuters) - Japan's Nikkei share average

held onto early gains on Thursday after the Bank of Japan kept

interest rates steady as was widely expected, while revising up

inflation forecasts.

That signalled the central bank's conviction that it can

eventually resume hiking rates, although policymakers again

sounded a cautious note on the economic outlook amid lingering

uncertainties over global trade.

The Nikkei was up 0.9% at 41,015.31, as of 0351 GMT.

The broader Topix traded 0.7% higher.

Investor focus now turns to BOJ Governor Kazuo Ueda's press

conference at 0630 GMT for hints on the timing of any rate

increases.

Traders had firmed up bets for the BOJ to resume raising

rates from as early as October after Tokyo reached a

long-awaited trade agreement with Washington earlier this month,

removing a degree of uncertainty from the economic outlook.

In its quarterly outlook report, the BOJ said while trade

talks had seen progress, uncertainty surrounding each country's

negotiations, and the economic and inflationary impact remain

high.

"The BOJ continues to be cautious on global risks,

especially the tariff policy from the United States," said Tohru

Sasaki, chief strategist at Fukuoka Financial Group.

"And actually, between Japan and the U.S., their

understanding of the tariff agreement is totally different, so

there's still uncertainty."

On the Nikkei, earnings were the biggest driver of stock

moves on Thursday. Kyocera ( KYOCF ) jumped 8.6%, while Astellas

Pharma ( ALPMF ) climbed 6.9% and Nissan ( NSANF ) rose 2.6%.

At the other end, Panasonic Holdings ( PCRFF ) slumped 3.4%.

Shares of companies that benefit from a drop in copper

prices outperformed, with Fujikura ( FKURF ) and Furukawa

Electric ( FUWAF ) each rallying about 5.7%.

Startup investor SoftBank Group was another

standout performer, advancing 3.2%.

(Reporting by Kevin Buckland; Additional reporting by Rocky

Swift; Editing by Subhranshu Sahu)