Japan's Nikkei share average on Tuesday experienced a marginal uptick as investors exercised caution ahead of the Bank of Japan (BOJ) policy decision, focussing on potential shifts in negative interest rates.

The Nikkei increased by 0.15 per cent to 32,808.70 as of 02:10 GMT, displaying fluctuations between minor gains and losses, while the broader Topix declined by 0.21 per cent.

Analyst Kazuo Kamitani from Nomura Securities described the market atmosphere as "the calm before the storm," stressing the importance of the impending BOJ decision. 

The central bank, known for occasional surprises, has been signalling a potential departure from negative rates, contributing to market uncertainty.

Although economists are not anticipating an immediate policy change, concerns linger among traders about possible moves at the January meeting. 

The BOJ's policy decision announcement, typically around 12:30 pm, coincides with the stock market reopening from the midday recess.

BOJ Governor Kazuo Ueda is scheduled to hold a news conference at 03:30 pm local time, 30 minutes after the stock market close.

Ahead of the policy announcement, benchmark 10-year Japanese government bond yields rose up to 2 basis points to 0.68 per cent. 

The yen strengthened slightly to 142.48 per dollar, a retreat from Thursday's 5 1/2-month peak at 140.95.

Exporter stocks, sensitive to exchange rate fluctuations, saw declines, with Toyota Motor down by 0.44 per cent, Mazda by 0.72 per cent, and Sony Group by 1.03 per cent. 

Nippon Steel, which announced a deal to acquire US Steel for $14.9 billion, experienced a 3.24 per cent drop, making iron and steel the worst-performing industry group on the Tokyo Stock Exchange.

Conversely, chip-related shares outperformed on the Nikkei, constituting three of the index's top four supports. 

Tokyo Electron, a chip-testing equipment giant, led with a 1.52 per cent gain, while Lasertec and Advantest also contributed with jumps of 3.5 per cent and 1.07 per cent, respectively. 

Fast Retailing, the owner of Uniqlo stores, added 0.82 per cent and served as another major support.

Among the Nikkei's 225 components, 78 recorded gains, 143 registered declines, and four remained unchanged.

(With Reuters Inputs)