TOKYO, Jan 12 (Reuters) - Japan's Nikkei share average was little changed on Thursday ahead of key U.S. inflation data that would likely provide clues on the Federal Reserve's monetary policy path for 2023.
The Nikkei ended the morning session up 0.03% at 26,455.06, after touching 26,547.61 for the first time since Dec. 27 earlier, tracking overnight Wall Street gains amid bets that a mitigation in the pace of U.S. consumer price gains will allow the Fed to dial back the pace of its rate hikes.
Banking stocks, however, gained amid speculation of further policy tweaks at the Bank of Japan (BOJ), following a local media report that central bank officials would review the side effects of massive stimulus at their policy meeting next week.
Banking was the best performer among the Tokyo Stock Exchange's 33 industry sectors, rallying 3.48%.
Last month, the BOJ widened the band around its 10-year bond yield target, a move that allowed the yield to rise by up to 0.50% from the previous cap of 0.25%, leading to yields jumping to their highest since mid-2015.
"The topside is heavy, with investors fine-tuning positions ahead of the CPI report," said Maki Sawada, a strategist at Nomura.
"At the same time, the bottom also seems quite firm," she added. "The market's expectation that the U.S. economy can navigate a soft rather than hard landing is supporting stocks, including in Japan."
Travel-related shares declined amid entry restrictions on Chinese tourists and a visa ban for Japanese travellers to the mainland that have quashed hopes for a tourism-driven spending boost.
The air and rail transport sectors were among the biggest laggards, down 0.94% and 1.08% respectively.
Of the Nikkei's 225 components, 103 rose, 115 fell and seven were unchanged.
The broader Topix gained 0.34% to 1,907.73, its highest since Dec. 28. (Reporting by Kevin Buckland; Editing by Rashmi Aich)
