(Updates at 0600 GMT)

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

index ended lower on Thursday as investors locked in profits

after the Bank of Japan (BOJ) kept key rates unchanged.

The Nikkei fell 0.5% to close at 39,081.25. The

index tracked overnight declines in U.S. equities to open 0.25%

lower.

It fell more than 1% after the BOJ announced its policy. The

broader Topix slipped 0.3% to 2,695.51.

The BOJ maintained ultra-low interest rates on Thursday and

signalled the need to scrutinise global economic developments.

"Investors sold stocks to book profits after the big event

was over," said Takamasa Ikeda, senior portfolio manager at GCI

Asset Management.

"The Nikkei was a little bit overheated after a recent

rally. The BOJ's decision was in line with expectations but it

became a trigger for the sell-off."

The Nikkei rose to a two-week closing high on Wednesday.

Since peaking in July, it has been held hostage by a

volatile yen, driven by expectations of a U.S. rate cut

and a stronger dollar.

Still, the index has risen more than 17% this year.

Japan's markets have been hamstrung this week by political

uncertainty after the ruling Liberal Democratic Party-led

coalition lost its parliamentary majority in the weekend

election.

The make-up of the future government is in flux and Prime

Minister Shigeru Ishiba and the LDP may court smaller opposition

parties that favour maintaining ultra-loose monetary policy and

oppose plans to raise taxes.

Meanwhile, among stocks, Uniqlo-owner Fast Retailing ( FRCOF )

fell 2.21% and was the biggest drag on the Nikkei on

the day.

Kyocera ( KYOCF ) tanked 10.42% after the smartphone maker

cut its full-year operating profit forecast for fiscal year

2025.

Chip-testing equipment maker Advantest ( ADTTF ) jumped 6.43%

on a profit forecast upgrade, but pared some of the early gains

due to profit booking.