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 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]