* Futures settlement at 14,323.29 can serve as support - trader * Sharp extends decline on dilution concern By Ayai Tomisawa TOKYO, Sept 13 Japan's Nikkei share average edged up in choppy trade on Friday morning as many investors awaited next week's key U.S. Federal Reserve policy meeting. The Nikkei rose 0.2 percent to 14,414.91 in mid-morning trade, still down 1 percent from a seven-week high of 14,561.46 hit earlier this week. The September Nikkei futures and options settled at the market open on Friday at 14,323.29, according to traders who compiled the data. The settlement price, which was lower than the current Nikkei price, will likely serve as a short-term support to the market, traders said. "If the index nears that level, the market will likely see investors buying on the dips," said a fund manager at a Japanese asset management firm. The Topix was flat at 1,184.81. Exporters were mixed, with Toyota Motor Corp adding 0.2 percent, Toshiba Corp falling 0.7 percent and Sony Corp gaining 0.1 percent. The dollar wobbled around 99.50, staying below a seven-week peak of 100.62. Sharp Corp dropped another 4.4 percent. It fell 6.0 percent on Thursday, when sources told Reuters the company plans to raise as much as 150 billion yen ($1.5 billion) through a public share offering. Traders said the question is whether the Federal Reserve will begin to scale back its $85 billion monthly stimulus at its Sept. 17-18 meeting and by how much. "The market has priced in the possibility that the Fed will start tapering soon so it should not be negative to the market unless the Fed blurs the schedule and the size of tapering," said Tomochika Kitaoka, a strategist at Mizuho Securities. "If the Fed leaves the market with uncertainty again, it could trigger a rise in the U.S. yield and a drop in the stock market," he said. The Nikkei is down 10 percent from its May peak, but has still gained 39 percent this year.