TOKYO, March 8 (Reuters) - Japan's Nikkei share average rose to a 3-1/2-month high on Wednesday, as a weakening yen buoyed exporters and receding expectations of imminent tweaks to Bank of Japan policy lifted the real estate sector.

Retailer shares also rallied on optimism for a return of mainland Chinese tourists after Japan reopened its borders this month.

The Nikkei ended the morning session up 0.22% at 28,370.92 after earlier reaching 28,431.15 for the first time since Nov. 24. The index has rallied 3.4% since last Thursday.

The broader Topix rose 0.13% to 2,047.56. Earlier, it touched 2,050.09, a level not seen since November 2021.

The rise in Japanese stocks came even as most other Asian markets declined after Federal Reserve Chair Jerome Powell raised the possibility of the U.S. central bank returning to large rate hikes to tackle stubbornly high inflation.

That sent U.S. long-term yields higher, but also the dollar against the yen. The Japanese currency dipped to a near three-month low around 137.50 to the greenback, boosting the value of overseas revenue at automakers and other exporters.

Mazda jumped 2.37% and Sony advanced 0.63%. Uniqlo store owner Fast Retailing gained 0.98%.

Nissan, however, tumbled 3.57% to lead decliners after S&P cut its rating to junk status.

Department store operators also rallied, with J. Front Retailing and Isetan Mitsukoshi Holdings each up about 3.3%.

"It looks like global investors' focus is on the possibilities for inbound tourism," said Yunosuke Ikeda, chief equity strategist at Nomura Securities.

"I am a little cautious on further upside, in particular for growth stocks in the next couple of months," he added. "U.S. monetary policy will have an impact on valuation adjustments."

Ikeda also said expectations were declining for a hawkish tweak to BOJ policy on Friday at Governor Haruhiko Kuroda's last meeting before retirement, buoying rate-sensitive property stocks and hurting financial shares.

Real estate was the Nikkei's best performing sub-sector on Wednesday, rising 0.81%, while financials eased 0.14%.

Energy was the biggest laggard, dropping 1.31% after a slide in crude prices overnight. (Reporting by Kevin Buckland and Yantoultra Ngui; Editing by Subhranshu Sahu)