* Turnover falls below 2 trillion yen for 2nd day
* Seibu Holdings up after Cerberus sells remaining stake in firm
* Rise in industrial metal prices lifts smelters
TOKYO, Aug 17 (Reuters) - Japanese stocks felt the weight of a rebounding yen and edged down on Thursday in thin trade, while conglomerate Seibu Holdings rose after an equity fund sold its remaining stake in the company to end a decade-old capital tie-up.
The Nikkei share average ended 0.1 percent lower at 19,702.63 and the broader Topix shed 0.1 percent to 1,614.82. Turnover was only 1.806 trillion yen ($16.44 billion), below 2 trillion yen for a second straight day.
Investor appetites were dented as the yen gained against the dollar after minutes of the Federal Reserve's last meeting showed policymakers were worried about weak U.S. inflation. President Donald Trump's decision to dismantle two key business advisory councils also hurt the dollar.
"The dollar going below 110 yen on what was perceived as dovish Fed minutes is acting as a drag for the Nikkei. Dollar/yen is the main driver for a market that is range bound and short of other incentives," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management.
"As for Trump's latest decisions, they might not have an immediate impact on the Japanese market. But their effects could be unavoidable in the longer term, as they could negatively impact expectations towards the U.S. economy."
Wall Street shares ended off the day's highs on Wednesday, as Trump's move increased doubt about the president's ability to push through tax reforms and fiscal stimulus policies.
Banking and insurance stocks underperformed, with Mitsubishi UFJ Financial Group and Dai-ichi Life Holdings both falling 0.9 percent.
Railway and hotel conglomerate Seibu Holdings Inc rose 4.2 percent after it said U.S. private equity firm Cerberus Group disposed all of its remaining 2.35 percent stake in the company.
Cerberus took a stake in Seibu Holdings in 2006 to provide the then-struggling conglomerate with much-needed assistance. The relationship between the two appeared fraught at times.
Industrial metal refiner and manufacturer Toho Zinc Co rallied 11.5 percent after the price of zinc surged to the highest in almost a decade.
With other industrial metals also buoyant on expectations of strong global demand - aluminium and copper hit their highest since 2014 - Tokyo's non-ferrous metals subindex rose 0.55 percent.
Smelters Dowa Holdings and Sumitomo Metal Mining Co gained 2.5 percent and 2 percent, respectively. ($1 = 109.8600 yen) (Editing by Richard Borsuk)