Japan's Nikkei rises on trade talk hopes; set for first monthly gain in four

By Jiaxing Li and Junko Fujita

HONG KONG, April 30 (Reuters) - Japan's Nikkei share average rose slightly on Wednesday as investors awaited developments in U.S.-Japan tariff talks, putting the benchmark on track for its first monthly gain since December.

The Nikkei .N225 ended the morning session 0.2% higher at 35,902.51, after briefly slipping into losses in early trades. The index was headed toward its fifth straight session of gains, the longest winning streak since last August.

The broader Topix .TOPX added 0.4% to 2,660.24.

Japan's top trade negotiator, Ryosei Akazawa, said he aims to make steady progress in tariff negotiations with the U.S. He will travel to Washington later in the day to meet his counterparts for a second round of discussions.

Fresh data showed Japan's March factory output fell more than expected, dragged down by its key motor vehicle industry as U.S. President Donald Trump's tariff policies continued to rattle manufacturers.

"The Nikkei's gains were limited as investors are waiting for the next step in the tariff talks," said Shuutarou Yasuda, a market analyst at Tokai Tokyo Intelligence Laboratory.

"For the Nikkei to climb further, a concrete cue - such as an agreement between Japan and the U.S. — is needed."

The benchmark index has now largely recovered from the shocks of the tariffs announced in early April, gaining 0.8% so far in April and looking to end its first month in the green since December.

The markets have largely restored the calm in recent weeks on hopes of easing trade tensions. Moving away from U.S. assets amid the tariff-induced chaos also helped Nikkei's rebound.

The stock that gained the most on Wednesday among the top 30 core Topix names was Sony Group 6758.T, up 5.11%, after a report the group is considering spinning off its semiconductor arm, in a move that would unlock value in the company.

The under-performers were Hitachi 6501.T, down 4.8%, followed by Fast Retailing 9983.T, which lost 2.4%.

Meanwhile, the Bank of Japan (BOJ) is widely expected to leave rates unchanged at its two-day policy meeting ending Thursday.

A weaker yen generally benefits Japanese equities by boosting the value of exporters' overseas revenues. Last month, Trump accused Tokyo of pursuing policies to weaken the yen, arguing that it gave Japan an unfair trade advantage.