Japan's Nikkei falls for 3rd straight session as BOJ policy shift bets weigh

(Updates prices)

By Brigid Riley and Mayu Sakoda

TOKYO, March 13 (Reuters) - Japan's Nikkei share average fell for a third straight session on Wednesday as investors assessed the likelihood of a policy shift at next week's Bank of Japan (BOJ) meeting.

The Nikkei fell 0.26% to close at 38,695.97, retreating after briefly surpassing the psychologically significant 39,000 level.

The broader Topix ended 0.33% lower at 2,648.51.

Market players were trading with caution ahead of the BOJ's policy meeting, with many expecting Japan's central bank to lift short-term interest rates from negative territory either next week or by April.

Chip-related shares tracked overnight Wall Street gains to cap the losses, with Tokyo Electron and Advantest rising 2.41% and 0.36%, respectively.

However, 137 of the index's 225 constituents declined, with losses in major shares such as SoftBank Group, down 0.19%, and Uniqlo-brand clothing shop operator Fast Retailing losing 0.69%.

Electrical equipment manufacturer Daikin Industries fell 2.64%.

The yen strengthened in the Asian morning, weighing on exporters that benefit from a weaker currency, as traders awaited the initial results of the closely watched spring wage negotiations, due out on Friday.

Toyota Motors was down 0.89%.

"If a higher rate of wage increases than last year is confirmed, views that the BOJ will exit from negative interest rates at the March meeting will strengthen," said Maki Sawada, a strategist at the investment content department of Nomura Securities.

In that case, "the appreciation of the yen against other currencies will likely weigh on stock prices," she added. (Reporting by Brigid Riley; additional reporting by Mayu Sakoda; Editing by Dhanya Ann Thoppil and Mrigank Dhaniwala)