Nikkei hits 8-wk high ahead of BOJ, Elpida rises

* Chip-linked shares rise following gains in US peers

* Elpida gains after media report of upbeat earnings

* Eyes on BOJ policy decision

By Masayuki Kitano

TOKYO, March 17 (Reuters) - Japan's Nikkei average hit an eight-week high on Wednesday as chip shares rose on hopes of positive earnings guidance from Intel (INTC.O), with Elpida Memory 6665.T also climbing on a media report of upbeat earnings.

The Nikkei rose 0.8 percent, gaining additional support after the Federal Reserve maintained its pledge to keep interest rates low for an extended period, which lifted U.S. shares to a 17-month high.

The Fed's policy decision, however, offered no surprises and market players were turning their attention to the Bank of Japan's policy decision later on Wednesday.

Sources familiar with the thinking of Japan's central bank have told Reuters it is leaning towards easing monetary policy at its two-day policy review that ends on Wednesday, under pressure from a government calling for action to beat deflation and which some analysts suspect is aimed at weakening the yen. [ID:nTOE62F01H]

The BOJ is seen likely to keep interest rates unchanged at 0.1 percent, and a focal point is whether the central bank will decide to expand its three-month fixed-rate fund supply operation, either by increasing the amount from the current 10 trillion yen or by extending the length of the operation to six months or longer.

"One key point to watch is how currencies move after the BOJ's decision," said Yutaka Miura, senior technical analyst at Mizuho Securities, adding that Tokyo shares could extend gains if the yen weakens following the BOJ's policy decision.

But market players say there is a risk that Tokyo shares may not rise much even if the fund supply scheme is expanded, since the yen has already retreated this month and Tokyo shares have already rallied on speculation about such measures.

The Nikkei rose 87.38 points to 10,809.09 .N225. It rose as high as 10,819.08, its highest level in around eight weeks.

The broader Topix .TOPX rose 0.6 percent to 944.13 .TOPX.

In terms of flows, some hedge funds known for short-term trading were buyers this morning, both to cover short positions and to create new longs, said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.

In addition, European players picked up some small- to medium-cap shares, Kuramochi said.

Chip-related shares rose broadly after Intel's shares rose 4 percent on Tuesday on speculation that the world's top chip maker is expected to release positive guidance for the current quarter, and the Philadelphia semiconductor index .SOXX gained 2.7 percent. [.N]

Chip equipment maker Tokyo Electron (8035.T) rose 1.2 percent to 5,900 yen, and Advantest (6857.T), which supplies chip testers to chip makers such as Intel, gained 0.8 percent to 2,215 yen.

Elpida Memory, the No.1 Japanese maker of DRAM chips, climbed 2.6 percent to 1,793 yen. The Nikkei business daily said the company is expected to return to the black with an operating profit of almost 20 billion yen ($222 million) for the year ending this month, buoyed by a recovery in DRAM chip prices. [ID:nTOE62F08X]

That would beat a forecast of an operating profit of 16.5 billion yen from 19 analysts polled by Thomson Reuters I/B/E/S. (Reporting by Masayuki Kitano; Editing by Edwina Gibbs)