Japan's Nikkei snaps three-day rally; earnings in focus

By Sam Byford

TOKYO, Oct 27 (Reuters) - Japan's Nikkei share average snapped a three-session rally on Thursday, as cautious investors focused on the outlook of individual stocks as earnings season hits full swing.

The Nikkei closed down 0.32% at 27,345.24. It occasionally traded in positive territory in the morning session before paring all the gains in the afternoon.

The broader Topix index fell 0.66%.

"In my opinion, the Nikkei was unusually strong yesterday," Nomura Securities strategist Kazuo Kamitani told reporters in a briefing, referring to the index hitting a nearly seven-week high on Wednesday.

Canon Inc was the session's biggest loser in the Nikkei, falling 6.22% after revising its net profit forecast downwards.

Seiko Epson Corp, which also makes printers, fell 4.79% following Canon's warning of decreased demand due to fewer customers working from home.

Hitachi Construction Machinery Co Ltd made the biggest gains in the Nikkei and rose 4.71% on its earnings report. The company now expects its operating profit for the fiscal year to be 17.6% higher than previously forecast.

Topix-listed video game maker Capcom Co Ltd was up 7.88% after increasing its profit guidance for the current year.

While the Bank of Japan is conducting its latest policy review meeting on Thursday and Friday this week, most market participants consider it unlikely that there will be any change to its ultra-easy monetary policy.

The BOJ has been an outlier this year as other central banks hike interest rates to tackle soaring inflation. "We think the meeting will probably have a limited effect on the market," Nomura's Kamitani said.

Of the Nikkei's 225 constituents, 164 declined, 54 advanced, and seven traded flat. (Reporting by Sam Byford; Editing by Rashmi Aich)