Nikkei drops ahead of BOJ decision
* Yamada Denki boosted by report to up stake in Best Denki * Asahi Glass sinks, cuts profit forecast on weak demand * Pharmaceuticals in favour, driven by Shionogi drug trial By Sophie Knight TOKYO, July 12 (Reuters) - Japan's Nikkei share average inched down in early trade on Thursday ahead of the outcome of a Bank of Japan policy meeting, with the central bank expected to hold off on further policy easing despite slowing global growth. Pharmaceuticals and other defensives led a handful of advancers as the week's "risk off" mode prevailed on hints from the U.S. Federal Reserve's June meeting that an imminent easing for the world's largest economy is off the cards. The Nikkei fell 0.4 percent to 8,817.18, while the broader Topix index lost 0.5 percent to 737.85, with trading thin ahead of the BOJ announcement expected around midday. "Expectations are divided between those that think the BOJ is going to do nothing and those that think they'll do the bare minimum, but no-one is expecting a big move," said Kenichi Hirano, operating officer at Tachibana Securities. "The recent tankan and economic review suggest there's not really a big enough sense of crisis for a big policy shift." The BOJ's tankan survey, released last week, showed improved sentiment among Japanese businesses, while its economic review was unexpectedly positive. However, others suggested political factors could force the BOJ to ease further by expanding its budget for exchange-traded funds and real-estate investment trusts, or by buying bonds with longer maturities. "The fundamentals definitely don't warrant easing, but if the BOJ don't ease at least once every three months they come under a lot of of political pressure," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley. "On the other hand there's a possibility the government are too busy with (Ichiro) Ozawa's new party to bother the BOJ." Japanese political veteran Ichiro Ozawa recently split from the ruling Democratic Party of Japan over a bill to double the consumption tax rate to 10 percent by 2014, forming his own party. While a sense of crisis about the euro zone debt woes has sufficiently receded for the Bank of Japan to hold fire on easing for now, investors are still concerned about a global slowdown as companies warn that the upcoming earnings season will see revenues below par. Asahi Glass Co Ltd fell 6.8 percent, hitting an almost 3-1/2 year low after the company cut its annual operating profit forecast due to weakening demand in Europe. Major exporters underperformed, with Mazda Motor Co dropping 2.1 percent and construction machinery maker Komatsu Ltd losing 2.3 percent. Pharmaceuticals saw gains, however, with the sector rising 0.8 percent as the best-performing subindex of the Topix index. Shionogi & Co Ltd rose 4.3 percent after one of its experimental AIDS drugs developed with partner GlaxoSmithKline proved better than rival Gilead's market-leading Atripla in a late-stage clinical trial. Japan's largest consumer electronics retailer Yamada Denki put on 1.5 percent after the Nikkei business daily reported it will increase its stake in smaller rival Best Denki by over 50 percent for more than 10 billion yen ($126 million). Best Denki soared 11 percent.