(Updates with closing prices)

TOKYO, Feb 5 (Reuters) - Japan's Nikkei share average

ended marginally higher in volatile trade on Wednesday as the

index's early gains were erased by worries over rising bets for

an interest rate hike by the Bank of Japan (BOJ) and a stronger

yen.

The Nikkei closed 0.09% higher at 38,831.48, after

rising as much as 0.8% in early trade to track Wall Street's

gains. It fell as much as 0.3% during the session.

"The Nikkei narrowed losses and entered a negative territory

as the yen strengthened and it never came back to a level it hit

earlier in the day," said Fumio Matsumoto, chief strategist at

Okasan Securities.

"The yen rose on growing bets that the BOJ might raise

interest rates again earlier than the market expected after data

showed a rise in wages."

Japan's December inflation-adjusted real wages rose 0.6%

year-on-year, thanks to a wintertime bonus bump, posting a

second consecutive monthly gain, government data showed.

The yen gained 0.7% in the Asian session to its

highest since mid-December 2024 and the Japanese government

yields hit new multi-year highs.

A stronger Japanese currency tends to hurt exporters' shares

as it decreases the value of overseas profits in yen terms when

firms repatriate them to Japan.

The broader Topix added 0.27% to 2,745.41,

supported by a 3.13% gain of Toyota Motor ( TM ), which raised

its full-year operating profit forecast by 9% during the

session.

Trading in Nissan Motor ( NSANF ) was suspended after a local

newspaper reported that the automaker has decided to drop plans

to merge with rival Honda Motor ( HMC ).

Nissan ( NSANF ) ended 4.87% lower, while Honda ( HMC ) jumped 8.19%.

Game maker Bandai Namco ( NCBDF ) surged 13.73% to become the

top percentage gainer on the Nikkei.

Of the Nikkei's 225 stocks, 98 rose, 124 fell and three

traded flat.