Japan's Nikkei licks wounds after selloff sparked by BOJ hike bets

(Updates with closing prices)

By Kevin Buckland

TOKYO, Dec 2 (Reuters) - Japan's Nikkei share average ended flat on Tuesday in lacklustre trading, a day after a sharp selloff sparked by hints that the Bank of Japan could raise interest rates as early as this month.

The Nikkei finished the session at 49,303.45, from 49,303.28 on Monday when it tumbled 1.9% to break below the psychological barrier of 50,000.

The broader Topix added less than 0.1% to 3,341.06 following a 1.2% slide in the previous session.

BOJ Governor Kazuo Ueda said in a speech on Monday that policymakers would consider the "pros and cons" of a December rate hike, sending the strongest signal yet of near-term policy tightening.

This marked a hawkish shift in tone by Ueda, who had generally been a voice of caution among the bank's policy board members.

Japanese government bond yields climbed to fresh multi-decade highs on Tuesday, including a record peak for the 30-year bond, extending a rise from Monday, when the debt market witnessed its heaviest selloff in four months.

"Ueda's message changed, and that had a big impact on the stock market," said Kenji Abe, an equities strategist at Daiwa Securities.

However, even if a quarter-point hike comes at the December 18-19 meeting, the policy rate would still be accommodative, and coupled with improving corporate earnings, will continue to support the stock market, Abe said.

Daiwa expects the Nikkei to rise to 60,000 by the end of next year and the Topix to climb to 4,000.

On Tuesday, Uniqlo owner Fast Retailing (FRCOF) was the biggest gainer by index points due to its extremely heavy weighting, with the stock's 1.8% increase contributing 98 points.

Fanuc (FANUF) was among the Nikkei's best performers in terms of percentage gains, rising 6.5% after the robot maker announced a collaboration with Nvidia (NVDA) to promote so-called "physical AI", with artificial intelligence integrated into robots.

The biggest drag on the Nikkei was startup investor SoftBank Group, one of the biggest local beneficiaries of the AI boom, which tumbled 5.2%.

Toyota Motor (TM) dropped 1.2% amid declines across automaker shares as a sharp appreciation in the yen overnight lowered the value of overseas revenues.

Of the Nikkei's 225 components, 112 rose versus 111 that fell, with two ending flat.

(Reporting by Kevin Buckland; Editing by Christian Schmollinger, Subhranshu Sahu and Harikrishnan Nair)