Nikkei up 0.4 pct as Fast Retailing gains, Fed eyed

* Trade thin, lacks direction ahead of FOMC, ECB -analyst

* FOMC comment on time frame for rate policy eyed -strategist

* Chip shares fall after Morgan downgrade of U.S. chip sector

By Aiko Hayashi

TOKYO, Nov 4 (Reuters) - The Nikkei average rose 0.4 percent on Wednesday, with Fast Retailing (9983.T) climbing on a surge in sales at its Uniqlo clothing stores but chip-related stocks lost ground after Morgan Stanley downgraded the U.S. semiconductor sector to "cautious".

Shionogi & Co (4507.T) extended gains after saying it has applied for approval of its experimental influenza treatment, while Japan Steel Works (5631.T) surged after the maker of thermal and nuclear power generator parts lifted its full-year operating profit forecast.

But overall trade flip-flopped in a tight range throughout the day as investors remained cautious before a Federal Reserve statement on interest rates and the economy, analysts said.

"The biggest focus regarding the result of the FOMC meeting is the time frame for the U.S. low interest rate policy," said Soichiro Monji, chief strategist at Daiwa SB Investments.

"Eyes are on whether and how the word 'extended' will be used in the statement. Higher rates would be generally negative for stocks."

In thin trade, the benchmark Nikkei .N225 added 41.36 points to 9,844.31, after sliding 2.3 percent on Monday to hit a three-week closing low. Japanese markets were closed on Tuesday for a national holiday.

The broader Topix .TOPX was virtually flat at 881.27.

"There's a sense of relief in the market after some U.S. economic indicators such as ISM beat expectations during the market holiday in Tokyo," said Yumi Nishimura, deputy general manager at Daiwa Securities SMBC.

"But on the whole, the market is lacking direction as investors wait for results from the FOMC and the ECB meetings."

The factory gauge from the Institute for Supply Management on Monday pointed to a brisk pace of growth in the fourth quarter and hinted at an improvement in the labour market in October. [ID:nN02437173]

The S&P 500 and Nasdaq rose slightly on Tuesday as news of a major railroad acquisition helped sentiment, but the Dow edged lower on caution as the Federal Open Market Committee began a two-day meeting that day.

While investors expect the Fed to leave rates close to zero, they are nervous to hear what the officials say about the economic outlook. [.N]

The European Central Bank meets on Thursday and is widely expected to keep euro zone interest rates at a record low of 1 percent. [ECB/POLL]

FAST RETAILING UP, CHIP STOCKS SLIDE

Fast Retailing, the biggest positive contributor to the Nikkei 225, advanced 4.4 percent to 15,790 yen after sales at its Uniqlo casual-clothing chain in Japan surged 35.7 percent in October from a year earlier.

It was the biggest jump in over eight years, as cost-conscious consumers snapped up jackets and other winter items. [ID:nT73789]

Shionogi extended gains to jump 3.4 percent to 2,010 yen after the pharmaceutical firm said it has applied for approval of its experimental influenza treatment Peramivir in Japan. [ID:nTFA006488]

Shares of companies with upbeat earnings outlooks gained.

Japan Steel Works shot up 10 percent to 1,096 yen after the company lifted its full-year operating profit forecast 7.1 percent on cost-cutting efforts.

Furukawa Electric (5801.T) jumped 7.7 percent to 364 yen after revising its net income forecast for the April-September first half to a profit from an earlier estimate of a loss, citing a recovery in demand for electronics and auto parts as well as cost-cutting.

Among exporters, Sony Corp (6758.T) fell 0.8 percent to 2,605 yen and Canon Inc (7751.T) slipped 0.6 percent to 3,400 yen.

Chip-related stocks fell after Morgan Stanley downgraded the U.S. semiconductor sector to "cautious" from "attractive" and cut its rating on several chip stocks including Intel Corp (INTC.O), saying inventories were beginning to creep up in the sector. [ID:nBNG421836]

The PHLX semiconductor index .SOXX lost 1.3 percent.

Tokyo Electron Ltd (8035.T), the world's second-largest semiconductor equipment maker, fell 5.1 percent to 4,850 yen and chip-tester maker Advantest Corp (6857.T) fell 1.3 percent to 1,971 yen.

Nikon Corp (7731.T), a key maker of steppers, retreated 1.7 percent to 1,648 yen.

Suzuki Motor (7269.T) slipped 1.8 percent to 2,130 yen after it quadrupled its year-to-March operating profit forecast to 40 billion yen ($442.8 million), below a consensus forecast of 47 billion yen by 16 brokerages. [ID:nT239507]

Some 1.7 billion shares changed hands on the Tokyo exchange's first section, below last week's daily average of 2 billion.

Declining stocks outnumbered advancing ones 810 to 733. ($1=90.33 Yen) (Editing by Michael Watson)