(Updates with closing prices)
TOKYO, Dec 18 (Reuters) - Japan's Nikkei share average
fell for a fourth session on Wednesday as investors remained
cautious ahead of central bank decisions in the U.S. and Japan,
while report of a Honda-Nissan tie-up boosted auto shares.
The Nikkei ended 0.72% lower at 39,081.71.
The broader Topix erased early gains to fall 0.31%
to 2,719.87, even as the auto sector rose 1.5% on
expectations for an industry reorganization.
Honda Motor ( HMC ) and Nissan Motor ( NSANF ) are in talks
to deepen ties, two people said, including a possible merger,
the clearest sign yet of how Japan's once seemingly unbeatable
auto industry is being reshaped by challenges from Tesla and
Chinese rivals.
"The report raised expectations that Japan's automakers will
start a consolidation and investors were prompted to buy auto
shares," said Fumio Matsumoto, chief strategist at Okasan
Securities.
"The market did not expect the closer tie-up between Nissan ( NSANF )
and Honda ( HMC ) would take place this early. Now, investors expect
less competitive automakers, such as Mazda ( MZDAF ), may be a target of
an acquisition."
Nissan ( NSANF ) surged 23.7% to a daily limit, while Honda ( HMC ) fell 3%.
Mitsubishi Motors ( MMTOF ) jumped 19.65% and Mazda Motor ( MZDAF )
gained 5.54%.
U.S. stocks retreated overnight and the Dow dropped for a
ninth straight session as investors exercised caution ahead of
the Federal Reserve's last policy announcement of the year after
economic data indicated consumer spending remained solid.
The Bank of Japan (BOJ) will conclude its policy meeting
on Thursday and announce its decision just hours after the Fed's
expected rate cut.
Uniqlo brand owner Fast Retailing ( FRCOF ) slipped 1.76% to
drag the Nikkei the most. Technology start-up investor SoftBank
Group lost 4%.
Okasan's Matsumoto said the Nikkei's gains would be limited
toward the end of the year, with foreign investors going on
holidays.
"But losses will be limited as well, because of the
share buybacks by Japanese firms."