* Nikkei pares gains after disappointing start to earnings * Fanuc drags down index with loss of 6 pct * Investors cautious ahead of BOJ meeting on Friday By Sophie Knight TOKYO, April 26 (Reuters) - Japan's Nikkei share average ended flat on Thursday after dipping in and out of negative territory as a sluggish start to earnings season and wariness ahead of a Bank of Japan meeting dampened sentiment. The Nikkei ended at 9,561.83, while the broader Topix gained 0.1 percent to 810.10. Positive U.S. corporate earnings and the acquittal of ruling power heavyweight Ichiro Ozawa of violating fundraising laws led to modest gains in the morning, but the market reversed later in the day as underwhelming earnings from the likes of industrial robot maker Fanuc Corp took their toll. Fanuc was the most heavily traded stock on the main board, down 6.1 percent. It was also the top weighted loser and took 36 points off the benchmark. Market players have been holding back from taking major positions this week in anticipation of a Bank of Japan meeting on Friday to decide whether to introduce further easing measures. The Federal Reserve stood pat on its monetary policy on Wednesday and reiterated its expectation that interest rates would not rise until late 2014, while the BOJ is widely predicted to boost asset purchases by up to 10 trillion yen ($123 billion) and some strategists say it may also buy longer-dated Japanese government bonds in an effort to rev up the economy. Hideyuki Ishiguro, assistant manager of investment strategy at Okasan Securities, said the BOJ's expected move had been largely priced into markets, but would have one advantage - demonstrating that the central bank can act independently of its U.S. counterpart. "I think it may change overseas investors' thinking of the BOJ, who believe now that it only acts in response to the U.S.
Federal Reserve. Any move (by the BOJ) would show that the bank is now acting based on its own thinking and its own stance," said Ishiguro. Yet the BOJ might tread carefully, awaiting more concrete measures from the Federal Reserve in June, says Ryota Sakagami, chief equity strategist at SMBC Nikko Securities. "If the Fed were to act in June and the BOJ didn't follow up and ease, then the yen would strengthen again. So they might be very conservative this time," he said. Market participants hope Japan's earnings season, which began in earnest on Wednesday, will swell trading volumes and send the Nikkei back above the psychologically key 10,000 level. Glass makers gained on the back of better-than-expected first-quarter results from U.S. Corning Inc overnight. Nippon Electric Glass Co Ltd climbed 2.2 percent and Asahi Glass Co Ltd advanced 1.8 percent. Yet the first day of the season otherwise proved a damp squib, with Canon Inc falling 2.2 percent after posting flat quarterly results, and construction machinery makers coming under pressure following below-par results from Caterpillar overnight. Hitachi Construction fell 3.7 percent after it logged an operating profit for 2011/12 that fell short of its own forecast and market expectations after a strong yen shaved revenue, dragging Komatsu Ltd down 1.5 percent before its guidance after the bell. Komatsu posted an operating profit for the year ended March 31 of 256 billion yen ($3.14 billion), below its previous forecast of 282 billion yen. "Even if companies come out with upbeat forecasts I don't think it will drive share prices up that much, but if they come out with gloomy guidance, then prices will certainly fall," said SMBC Nikko's Sakagami. Trading volume rose on Thursday, with 1.56 billion shares changing hands on the main board, up from 1.43 bililon shares the previous session. POLITICAL UNCERTAINTY The acquittal of former ruling party leader Ozawa pushed the Nikkei to an intraday high of 9,630.97. Ozawa, who heads the largest faction in the ruling Democratic Party of Japan, could challenge Prime Minister Yoshihiko Noda's plan to double consumption tax if the Tokyo District Court decision is upheld. The gain was quickly eroded, but investors will be on the lookout for internal friction in the party that could hamper budget reforms needed to contain Japan's mushrooming debt. "It just adds another level of uncertainty. We have no indication where the politics are headed," a senior trader at a foreign brokerage said. Falling sharply in the session was Nomura Holdings, which lost 2 percent after sources told Reuters that Japan's market regulator had sent investigators to the broker's Tokyo offices in an escalation of a probe into its suspected involvement in leaking inside information.