* BOJ's decision to keep ETF purchase unchanged relives market - analyst
* Nikkei posts biggest monthly gain in 2 years
* SoftBank skids, while upbeat forecast lifts Nintendo
TOKYO, Oct 31 (Reuters) - Japan's Nikkei share average ended flat on Tuesday as losses in SoftBank offset optimism fuelled by the Bank Of Japan's decision to leave its purchase of exchange traded funds unchanged.
The Nikkei closed at 22,011.61 after trading in negative territory most of the day. For the month, the index jumped 8.1 percent, the biggest monthly gain in two years.
Index-heavyweight SoftBank Group Corp stumbled 4.6 percent and was the second most traded stock by turnover, contributing a hefty negative 53.76 points to the Nikkei after sources said that SoftBank and Deutsche Telekom AG have reached an impasse in their talks to merge Sprint Corp and T-Mobile US Inc.
The Nikkei would have ended positive if not for the negative impact of SoftBank's fall.
The Bank of Japan kept its monetary policy steady and roughly maintained its ambitious price forecasts.
It also left J-Reit and ETF purchases unchanged at 90 billion yen ($795.9 million) and 6 trillion yen, respectively.
With the Nikkei benchmark index hovering near its 21-year highs, the BOJ did not buy ETFs for almost a month as it tends to buy them when the market falls. That left the market wondering how the bank would be able to maintain its pledged pace of increasing holdings by about 6 trillion yen a year.
The central bank bought ETFs on Monday for the first time this month for 70.9 billion yen, down from 73.9 billion yen it bought in September and 73.3 billion yen in August.
"Investors were watching whether the BOJ would make a change in its ETF purchasing amount, so when they learned that there was no change, they were relieved," said Yutaka Miura, a senior technical analyst at Mizuho Securities.
"The Nikkei was supported somewhat amid a strong yen environment because the BOJ maintained the purchase."
The dollar dropped 0.1 percent to 113.07 yen, after touching 112.97 yen earlier, its lowest level since Oct. 20, following news that investigators probing Russian interference in the U.S. election had charged President Donald Trump's former campaign manager.
Financial stocks were losers after U.S. yields fell, with the banking subindex shedding 1.6 percent and the securities subindex falling 1.3 percent.
Shares of Nintendo jumped 2.2 percent, a day after the Japanese videogames maker almost doubled its full-year operating profit forecast as supply shortages for its new Switch games console began to ease.
The broader Topix fell 0.3 percent to 1,765.96. ($1 = 113.0800 yen) (Reporting by Lisa Twaronite and Ayai Tomisawa; Editing by Gopakumar Warrier)