TOKYO, March 13 (Reuters) - Japan's Nikkei share average was set for its third consecutive day of declines on Wednesday, as investors assessed the likelihood of a policy shift at the upcoming Bank of Japan monetary policy meeting.
The Nikkei was down 0.42% at 38,636.12 by the midday break, retreating after briefly surpassing the psychologically significant 39,000 level.
The broader Topix was down 0.39% at 2,646.99.
Market players were trading with caution ahead of the BOJ's policy meeting, with many expecting Japan's central bank to lift short-term interest rates from negative territory either next week or by April.
Among index heavyweights, chip-making equipment giant Tokyo Electron advanced 1%, followed by a 0.8% increase in Honda Motor.
However, 140 of the index's 225 constituents declined, with losses in major shares such as SoftBank Group, down 0.8%, and Uniqlo parent company Fast Retailing, which fell 0.3%, eroding early gains.
Electrical equipment manufacturer Daikin Industries topped heavyweight declines, losing 2.6%.
The yen strengthened in the Asian morning, weighing on exporters that benefit from a weaker currency, as traders awaited the initial results of the closely watched spring wage negotiations, due out on Friday.
Toyota Motors was down about 1%.
"If a higher rate of wage increases than last year is confirmed, views that the BOJ will exit from negative interest rates at the March meeting will strengthen," said Maki Sawada, a strategist at the investment content department of Nomura Securities.
In that case, "the appreciation of the yen against other currencies will likely weigh on stock price," she added.
(Reporting by Brigid Riley; additional reporting by Mayu Sakoda; Editing by Dhanya Ann Thoppil)
