TOKYO, Dec 20 (Reuters) - Japan's Nikkei share average rose on Tuesday afternoon after the market digested the Bank of Japan's decision to maintain current monetary policy, while the yen's fall versus the dollar lifted overall sentiment.
The Nikkei gained 0.6 percent to 19,504.64 in mid-afternoon trade, after staying nearly flat in the morning session.
The BOJ kept monetary policy steady on Tuesday and took a more upbeat view of the economy than of late, reinforcing market expectations that its future policy direction could be an increase - not a cut - in interest rates.
"There was no particular surprise from the policy meeting, but investors are happy that the economy's fundamentals are finally rising after the BOJ expressed an upbeat view of the economy," said Takuya Takahashi, a strategist at Daiwa Securities.
The U.S. dollar advanced 0.4 percent to 117.57 yen, after closing 0.7 percent lower on Monday.
Takahashi added that despite the weakening yen, the rising sectors are mainly composed of stocks sensitive to domestic demand.
"Buying is limited to stocks that fell behind the rises in exporters and banks in the past month or so," Takahashi said.
The land transport subsector rose 1.3 percent and the real estate subsector gained 0.9 percent.
East Japan Railway Co added 1.7 percent, West Japan Railway Co rose 2.1 percent. Real-estate developer Mitsui Fudosan Co gained 1.3 percent.
Japanese stocks have soared in the past month or so thanks to a surging dollar, which gained against the yen on expectations that the incoming the Trump Administration will boost fiscal spending, growth and inflation.
Traders said that trading volume is expected to be low again as foreign investors head off on Christmas holidays this week. On Monday, both trading volume and turnover were the lowest since Nov. 8.
The broader Topix added 0.2 percent to 1,551.95 and the JPX-Nikkei Index 400 advanced 0.2 percent to 13,907.09. (Reporting by Ayai Tomisawa; Editing by Eric Meijer)