* Foreign investors place large net buy orders
* Short-term hedge funds pricing in Fed event - traders
* Foreign investors' Japan stock allocation at highest in Dec - BoFA Merrill
TOKYO, Dec 18 (Reuters) - The Nikkei share average rose 1.2 percent on Wednesday morning, as short-term investors bet the outcome of the U.S. Federal Reserve's policy meeting won't materially alter a promising outlook for Japanese equities. The Nikkei added 181.84 points to 15,460.47 in mid-morning trade after opening nearly flat. Traders said that investors placed futures orders soon after the market opened. "The yen is expected to stay weak, policy remains easy, and corporate profits are likely to rise in Japan, so most foreign investors have kept their bullish stances on Japan," said Isao Kubo, equity strategist at Nissay Asset Management. Traders also added that short-term hedge funds are buying futures and large cap stocks on the assumption that the U.S. market will rise after the Fed's policy-setting meeting regardless of the outcome. "The Fed's taper timing is being focused and it's still investors' main concern. But no matter what it says later, the event (policy meeting) will be over, and event-driven funds are betting that the market will rise anyway," said a fund manager at a Japanese asset management firm. "But they are quick to take profits, so the market could see some selling before the market close if they think the U.S. market won't rise as much as they had expected." Although a steady run of firm U.S. economic data in recent weeks has raised speculation that the Fed could reduce its bond buying at its policy meeting ending on Wednesday, a majority of investors still think stimulus-tapering will happen early next year. The Topix gained 0.7 percent to 1,240.54, with 32 of its 33 subsectors in positive territory. Large cap stocks such as SoftBank Corp and Fast Retailing Co attracted buyers, rising 1.4 percent and 2.0 percent, respectively. SoftBank was the second most traded stock by turnover, while Fast Retailing was the sixth biggest. Also lifting sentiment was large net buying --12.1 million shares--placed by foreign investors before the market open, traders said. Bank Of America Merrill Lynch's December fund manager survey showed that global investors' Japan equity allocation has risen to 34 percent from 24 percent from the previous month. It also said that going overweight on Japanese stocks continued through this year, and reached the heaviest figure in December. On a sectoral-basis, technology is now the most popular, with autos still in second and pharmaceuticals came in as the least preferred sector, Naoki Kamiyama, head of Japan equity strategy, wrote in a report. The Nikkei is up 50 percent this year, driven by Tokyo's aggressive fiscal and monetary stimulus aimed at pulling the world's third-largest economy out of two decades of stagnation. The benchmark is on track for its best yearly rise since 1972.