Japan's Nikkei rises as investors eye US tariff talks after BOJ holds rates steady

By Kevin Buckland

TOKYO, May 1 (Reuters) - Japan's Nikkei share average rose on Thursday after the Bank of Japan refrained from raising interest rates, as widely expected, while investors awaited developments in U.S. trade talks with Tokyo's top negotiator in Washington.

The Nikkei .N225 was up about 0.6% at 36,248.94, as of 0334 GMT, shortly after the start of the afternoon session. The BOJ's policy announcement came when the market was shut for the midday recess.

The broader Topix .TOPX was up 0.2%.

The tech-heavy Nikkei was buoyed by chip-testing equipment maker Advantest's 6857.T 5.9% jump, as it tracked after-hours advances for U.S. tech megacaps Meta Platforms META.O and Microsoft MSFT.O on strong financial results.

The BOJ kept the benchmark rate at 0.5%, and cut forecasts for growth and inflation against a backdrop of aggressive U.S. tariffs.

"Without a significant easing of U.S. tariff policy, we expect the BOJ will maintain the current policy rate this year and in 2026, before raising the policy rate to 0.75% only in 2027," said Norihiro Yamaguchi, an economist at Oxford Economics.

Investors will be watching for additional details on the central bank's thinking when BOJ Governor Kazuo Ueda holds a news conference at 0630 GMT.

Notably, shipping shares .ISHIP.T as a group were the worst performers among the Tokyo Stock Exchange's 33 industry groupings, dropping 1.8% amid ongoing global trade uncertainty.

Later in the day, Japanese economy minister Ryosei Akazawa is likely to hold his second round of talks on a tariff deal.

U.S. President Donald Trump said on Wednesday that deals with Japan, South Korea and India might be close.

"Any progress in these negotiations, and although it will be little by little, we should see calm return to Japanese equities, and the Nikkei could recover to the 37,000 level," said Wataru Akiyama, a strategist at Nomura Securities.