Nikkei rises to 8-week high as market primed for modest Fed tapering
* Nikkei hits highest since late July
* All sectors in positive territory as market expects modest tapering
TOKYO, Sept 18 (Reuters) - Japan's Nikkei share average rose to an eight-week high on Wednesday, spurred by expectations the U.S. Federal Reserve will deliver only a modest cut to its massive stimulus program at the conclusion of its two-day meeting. The Nikkei rose 1.9 percent to 14,577.93 in mid-morning trade after rising to 14,578.34 at one point, the highest level since July 25. In the short-term, resistance for the Nikkei is seen at 13,606.66, a 68 percent retracement of its May high to its low in June. "The market has started pricing in the possibility that the Fed will start scaling back its stimulus but the impact is likely to be limited," said Hikaru Sato, a senior technical analyst at Daiwa Securities. The policy-setting Federal Open Market Committee began meeting on Tuesday to discuss whether to trim its $85 billion in monthly purchases, or quantitative easing. Many investors expect Fed chairman Ben Bernanke will announce later on Wednesday a modest scaling back of purchases by $10 billion a month, and signal that any actual policy tightening is still distant. Global markets have been buffeted in the past few months by the heightened speculation of a cut in the Fed's stimulus, which has underpinned riskier assets in recent years. Bellwether exporters rebounded, with Toyota Motor Corp rising 1.3 percent and Honda Motor Co up 1.3 percent. The Topix added 1.1 percent to 1,194.47, with all subsectors in positive territory. But analysts said that if the Fed scales back the stimulus only modestly, the dollar will be on the defensive, which may limit gains in the exporter-sensitive Japanese market. A weak yen lifts exporters' competitiveness abroad as well as their profits when repatriated. The greenback traded at 99.15 yen, not far off Monday's two-week low of 98.45. "If the timing and the size of tapering is announced as expected, the Japanese market may not rise that much compared to emerging countries where the impact from the Fed's tapering is bigger," said Mitsushige Akino, chief fund manager at Ichiyoshi Asset Management. Currencies and stocks in emerging countries were battered in recent months on worries that the Fed's tapering could prompt an exodus of capital out of the region. On Wednesday, Kawasaki Heavy Industries Ltd soared 4.7 percent after TV Tokyo reported that the company received orders worth 180 billion yen to make train cars for Long Island Railroad in New York. The benchmark Nikkei is up around 40 percent this year, underpinned by the Japanese government's aggressive monetary and fiscal stimulus, but is still down about 10 percent since its May peak.