Nikkei drops as market on edge with earnings in play, Fed outcome eyed
* Nikkei falls 1 pct, Topix down 0.6 pct
* Investors nervous before key events- trader
* Market looks to Fed statement, more earnings for direction
TOKYO, July 31 (Reuters) - Japan's Nikkei share average fell on Wednesday morning, as most investors adopted a wait-and-see stance ahead of another batch of key domestic earnings and the outcome of a Federal Reserve policy meeting for clarity on U.S. economic stimulus. The benchmark Nikkei declined 1 percent to 13,736.76 in midmorning trade, erasing much of its 1.5 percent advance on Tuesday, but was still on course for a first monthly gain in three months. The broader Topix fell 0.8 percent to 1,141.69. "Major global macro events due this week, including the FOMC, are a source of nervousness and anticipation," said Stefan Worrall, director of equity cash sales at Credit Suisse in Tokyo, attributing the decline to the lack of buyers. "This weakness today is reflective of the inability of yesterday's rally to generate self-sustaining momentum." Worrall added that corporate earnings results that came out this week were also not "consistently" positive to encourage investors. Fujitsu Ltd fell 3.1 percent after the industrial electronics maker reported a net loss of 21.9 billion yen for the April-June period. Some exporters also succumbed to selling pressure, with Toyota Motor Corp down 0.9 percent and Nikon Corp off 1.4 percent, as the Japanese currency hovered around 98.02 yen to the dollar, still not far to a one-month high of 97.64 hit on Monday. A stronger yen is seen as a negative as it makes export-reliant Japan's products less competitive in the global market. A few bright spots on earnings helped to contain the broad market losses. Index heavyweight SoftBank Corp gained 4.1 percent and was the most traded stock by turnover on the main board after the iPhone carrier raised its full-year earnings outlook for the year through March. Rival KDDI Corp jumped 7.3 percent after Japan's No.2 mobile carrier reported a record first-quarter profit that exceeded market expectations. Hitachi Ltd added 5.5 percent after the electronics conglomerate surprised the market by lifting its profit outlook for the first half ending September. On Wednesday, companies including Honda Motor Co, Fuji Heavy Industries Ltd, Panasonic Corp, Toshiba Corp and Japan Airlines Co Ltd are set to report first-quarter results after the market close. Later in the day, attention will shift to the Fed policy statement, with investors hoping for clarity on when the U.S. central bank will begin scaling back the massive bond-buying programme that has bolstered global financial markets in recent years.