Japan's Nikkei slips from record high, JGBs steady ahead of BOJ decision

(Adds bonds, currency movement, analyst comments in last two paragraphs. Changes media packaging keywords from JAPAN-STOCKS)

By Junko Fujita

TOKYO, April 28 (Reuters) - Japan's Nikkei share average slipped from a record high while the nation's bonds and currency held steady on Tuesday, as investors awaited the central bank's policy response to the oil shock driven by the U.S.-Israeli war against Iran.

The Nikkei fell 0.5% to 60,225.09, after closing above the key 60,000 mark for the first time on Monday. The broader Topix climbed 0.75% to 3,763.27.

The yield on the benchmark 10-year Japanese government bond was flat at 2.47%, near its 29-year peak of 2.49% reached earlier this month. The yen weakened 0.1% to 159.52.

"Overall market sentiment is not bad, but it is hard to make positions in one way ahead of central bank decisions in Japan and the U.S.," said Takamasa Ikeda, a senior portfolio manager at GCI Asset Management.

"And the market will be closed in Japan in the next session, and more sessions will be closed for the Golden Week holiday," he added.

The BOJ is widely expected to hold off raising interest rates on Tuesday, but drop hawkish signals to leave itself scope to push up borrowing costs in the coming months to counter inflationary pressure from the Middle East conflict.

Investors are focusing on the BOJ's quarterly outlook report and comments from Governor Kazuo Ueda for clues on how the protracted Iran war affects its rate-hike path.

Among individual stocks, Advantest (ADTTF) fell 3.2% after the chip-testing equipment maker flagged a gain in profit in the year through March 2027 that was in line with estimates though still below the blockbuster results that have come to be expected in the tech sector.

Chip-making equipment maker Tokyo Electron (TOELF) fell 2.63%.

On the other hand, high-flying memory maker Kioxia (KXHCF) jumped 4%.

Bank shares rose, with Mitsubishi UFJ Financial Group (MUFG) and Sumitomo Mitsui Financial Group (SMFG) rising 2.2% and 2.6%, respectively.

Moves were muted in the JGB market, with debt investors looking out for BOJ forecasts for growth and inflation that will stretch to 2028 for the first time, said Okasan Securities bond strategist Yuki Kimura.

"If the timing of the achievement of the inflation target is delayed, that means the BOJ will be 'behind the curve,'" Kimura said. "The market will be concerned that the BOJ's terminal rate will be higher, and that will send the yields of 5- and 10-year bonds higher."

(Reporting by Junko Fujita and Rocky Swift in Tokyo; Editing by Rashmi Aich and Jacqueline Wong)