Japan's Nikkei tracks Wall Street higher ahead of Trump inauguration

Corrects day of Fanuc's earnings in paragraph 5 to Monday next week, not Thursday

By Kevin Buckland

TOKYO, Jan 20 (Reuters) - Japan's Nikkei share average advanced on Monday, buoyed by gains on Wall Street and a weaker yen, even as a potential source of market volatility loomed in the form of U.S. President-elect Donald Trump's inauguration later in the day.

The Nikkei .N225 gained 1.29% to 38,948.47 as of the midday recess, starting the week on firm footing after three straight weeks of declines.

The broader Topix .TOPX rose 1.36%.

Whether the Nikkei can retain the momentum depends on the outcome of many big risk events this week - Trump's inauguration speech and any immediate executive orders coming in on Tuesday morning in Japan just when markets open.

U.S. earnings season is gathering pace and Japan's own corporate reporting season begins on Thursday, with chip-making equipment manufacturer Disco and motor maker Nidec. Factory robot maker Fanuc reports on Monday of next week.

The Bank of Japan will end a two-day meeting on Friday and recent rumblings from the central bank hint strongly at a quarter-point interest rate hike. However, that outcome too may depend on how markets digest Trump's first day in office.

Comments from Trump during Tokyo's morning trading on the day promised nearly 100 executive orders in the first few hours of his presidency.

"My impression is there's going to be a huge flow on information right when Japanese markets open tomorrow," said Kazuo Kamitani, an equities strategist at Nomura Securities.

"The environment for the market now hinges on whatever Trump has to say."

Kamitani said that while 40,600 is unlikely to be breached solely on anything Trump does and 37,600 looks like a firm floor, "within that range there's likely to be a high degree of volatility."

Of the Nikkei's 225 components, 198 climbed, 25 fell and two were flat.

Automakers .ITEQP.T were the top performers among the Tokyo Stock Exchange's 33 industry groups, after the yen dropped 0.8% against the U.S. dollar on Friday.

Toyota 7203.T was up 3.3%. Subaru 7270.T advanced 3.8%.

The Nikkei's biggest percentage gainer was Daiichi Sankyo 4568.T, which soared more than 9% after the U.S. Food and Drug Administration approved a breast cancer treatment it is developing with AstraZeneca AZN.L.

(Reporting by Kevin Buckland; Editing by Sumana Nandy)

((Kevin.Buckland@thomsonreuters.com;))