Japan's Nikkei climbs as oil prices ease, Fed decision reassures

TOKYO, Sept. 17 (Reuters) - Japan's Nikkei share average climbed on Thursday as investors snapped up beaten-down gaming and pharmaceutical stocks, while sentiment was supported by lower crude oil prices and a largely expected policy decision from the U.S. Federal Reserve.

The Nikkei .N225 rose 0.2% by 0157 GMT after climbing as much as 1% earlier in the session. The broader Topix .TOPX gained 0.6%.

Overnight, Brent crude dropped 2.6% as reports of Saudi Arabia offering extra crude cargoes through Oman reduced fears of supply disruptions in the Middle East.

The U.S. Fed raised its key interest rate by a quarter point, as widely expected, while signalling the likelihood of another hike this year.

"A major factor behind the rise in stocks today is there have been developments that have somewhat alleviated some of the uncertainty in markets," said Wataru Akiyama, an equities strategist at Nomura Securities.

"However, although gains are being seen across a wide range of sectors and stocks, the Japanese stock market cannot be described as being in a particularly strong position right now."

Interest rate-sensitive tech stocks are trading with a weak tone ahead of Bank of Japan policy decision on Friday and with a potential slowdown in AI development still being priced into the market, Akiyama added.

The BOJ is widely expected to raise rates by a quarter point.

Chip-sector heavyweights Advantest 6857.T and Tokyo Electron 8035.T were the biggest drags in the Nikkei, falling 1.9% and 2.2%, respectively.

However, some AI-related stocks bucked the trend, with SoftBank Group 9984.T rising 1% and cable maker Fujikura 5803.T adding 0.6%.