TOKYO, July 14 (Reuters) - Japan's Nikkei share average reversed course to end lower on Friday due to caution ahead of the central bank's policy meeting, while the yen's gain against the dollar prompted investors to sell stocks.
The Nikkei index inched down 0.09% to close at 32,391.26, having pulled back from a jump of as much as 1% earlier in the session. The index was flat for the week.
The broader Topix reversed course to inch down 0.17% to 2,239.10 and lost 0.7% for the week.
"Investors were cautions about the upcoming BOJ's policy meeting, and they sold stocks as the yen strengthened on speculation that the BOJ would tweak its policy," said Shoichi Arisawa, general manager - investment research, at IwaiCosmo Securities.
The Bank of Japan (BOJ) is scheduled to hold a two-day policy meeting starting July 27. Speculation that the central bank would tweak its ultra-loose monetary policy sent Japan's 10-year government bond yield to its highest in 4-1/2 months on Friday.
Meanwhile, the yen strengthened, touching a fresh two-month high of 137.245 earlier in the session, and is on course for its best week against the dollar since January, while the dollar hovered at 15-month lows.
Uniqlo-parent Fast Retailing reversed course to fall 2.09%, weighing the most on the Nikkei. The stock was initially set to add to its gains from Thursday when the retailer reported record third-quarter profit and raised its full-year forecast.
Technology investor SoftBank Group lost 2%.
Gains in chip-related shares limited the Nikkei's decline. Chip-testing equipment maker Advantest jumped 5.74% and chip-making equipment maker Tokyo Electron gained 1.76%.
Machinery maker Takisawa Machine Tool surged 25% to a daily limit high after electric motor maker Nidec announced a takeover plan of the firm, which has not yet supported the offer, raising speculation that the bid could turn hostile. Nidec shares rose 1.07%. (Reporting by Junko Fujita; Editing by Savio D'Souza and Sonia Cheema)
