* Fed due to release statement at 1630 GMT * Financials, real estate companies in demand * Mitsubishi Heavy falls, blamed for U.S. nuclear plant leak TOKYO, June 20 (Reuters) - Japan's Nikkei share average advanced on Wednesday on growing speculation that the U.S.
Federal Reserve will launch a new round of stimulus to help combat slower growth and the impact of the euro zone sovereign debt crisis.
The Nikkei gained 0.8 percent to 8,721.50, breaking above 8,714.78, the 23.6 percent retracement of its fall from March 27 to June 4.
"Market participants are extremely sensitive in a heightened stage of anticipation. The FOMC result tonight seems be to well telegraphed and it does seem to be there will be extension of 'Operational Twist'," said Stefan Worrall, direct of equity cash sales at Credit Suisse in Tokyo.
The Fed is due to release a statement at 1630 GMT, following a two-day meeting.
Financials and real estate companies, which benefit the most from any reflation trade, were in demand, with Nomura Holdings , Japan's top investment bank, up 2.9 percent, Daiwa Securities Group gaining 3.8 percent and Sumitomo Realty & Development adding 3.5 percent.
Lenders Sumitomo Mitsui Financial Group rose 1.9 percent and Mizuho Financial Group added 0.8 percent, while Mitsubishi UFJ Financial Group climbed 2.5 percent.
Bank of America Merrill Lynch said its top pick of major Japanese banks was Sumitomo Mitsui Financial Group, and raised its price target on the bank as well as Mizuho Financial Group.
"While the stock prices should continue to be affected by euro zone factors, we believe Japanese banks fundamentally offer good value and should be less affected by such global concerns, with asset risks quite low and solid growth possibilities supported by business expansion in the U.S. and Asia," Merrill Lynch said in a report.
Steelmakers rose 1.6 percent, rebounding from the previous session's fall after U.S. AK Steel forecast second-quarter profit that fell short of analysts' expectations and Tokyo Steel Manufacturing Co Ltd planned to drop prices for all contracts signed in July.
But a trader said the sector continued to face headwinds as ArcelorMittal, the world's largest steelmaker, was considering cutting more capacity in Europe to tackle over capacity and shrinking demand in the region, while a report that Toyota Motor Corp will cut its production capacity in Japan by more than 10 percent also boded ill for the country's steel firms.
Toyota put on 1 percent, while Honda Motor Co Ltd rose 1.6 percent after Nomura upgraded the carmaker to "buy" from "neutral" and lifted its price target, saying the company's U.S. sales had recovered faster than expected.
The broader Topix climbed 1.3 percent to 744.48.
Mitsubishi Heavy Industries Ltd shed 2.5 percent, however, after a U.S. court said the Japanese firm was responsible for a leak at a California nuclear power plant, as it did not properly test the pipes before installing them.
The benchmark Nikkei is down 13.5 percent so far this quarter after rallying more than 19 percent in January-March, logging its best first quarter performance in 24 years.
