TOKYO, Feb 21 (Reuters) - Japan's Nikkei share average

erased early losses to trade marginally higher on Friday, as

comments from Bank of Japan Governor Kazuo Ueda eased worries

that the central bank may be considering a more aggressive rate

hike stance.

The Nikkei was up 0.11% at 38,719.34 by the midday

break after falling as much as 0.6% on a stronger yen and

worries about U.S. tariffs.

The broader Topix was flat at 2,734.97.

Ueda said the central bank stands ready to increase

government bond buying if long-term interest rates rise sharply.

"Investors were excessively cautious about the BOJ's

monetary policy. But the market was relieved that the central

bank was not as hawkish as they had thought," said Seiichi

Suzuki, chief equity market analyst at Tokai Tokyo Intelligence

Laboratory.

Rising inflation has driven expectations that the BOJ will

keep raising interest rates higher and faster, pushing yields on

Japanese government bonds (JGBs) to more than decade-high levels

this week.

Ueda's comments came after data showed Japan's core consumer

inflation, a key gauge for policy, hit 3.2% in January, its

fastest pace in 19 months.

The yen rose to a 2-1/2 month high on Friday on the back of

a jump in Japanese inflation.

"The yen's strength has discouraged investors from buying

stocks today because the currency might move during the nation's

three-day weekend," said Yugo Tsuboi, chief strategist at Daiwa

Securities.

Japanese market will be closed on Monday for a public

holiday.

Concerns about the potential impact of U.S. President Donald

Trump's tariff threats also capped further gains on the Nikkei,

strategists said.

Trump has slapped an additional 10% tariff on Chinese goods

and announced plans to reimpose steel and aluminium levies from

his first term, but suspended threatened tariffs on Canada and

Mexico while numerous others remain - as of yet - only threats.

Drug maker Chugai Pharmaceutical ( CHGCF ) rose 3.55% to

become the biggest boost for the Nikkei. Chip-making equipment

maker Tokyo Electron ( TOELF ) rose 0.54%.

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