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Japanese shares fall ahead of Fed outcome

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TOKYO, Sept 22 (Reuters) - Japanese shares fell on Wednesday to their lowest in more than two weeks, as investors focussed on the U.S. Federal Reserve, which is expected to drop more hints on its future policy path, and a potential debt default by property giant China Evergrande.

The Nikkei share average was down 0.63% to 29,650.78 by 0209 GMT, while the broader Topix fell 0.67% to 2,050.67.

The Nikkei briefly changed course earlier in the day to trade higher after China Evergrande unit Hengda Real Estate Group said it would pay some bond interest due on Thursday, allaying fears of an imminent collapse that had spooked investors.

Although investors seemed to have factored in the news, it did not have enough power to send the Nikkei above 30,000 levels, said Shigetoshi Kamada, general manager at the research department of Tachibana Securities.

"That is because investor focus is on the Fed meeting... how the interest rate projections will look like and whether the Fed will start tapering before the end of the year," he said.

The outcome of the Fed's two-day meeting is scheduled at 1800 GMT with a news conference half an hour later.

Trading houses led the decline in Japanese equities, with Marubeni losing 3.59% and Mitsui & Co slipping 2.6%.

Machinery makers fell, with Daikin Industries losing 2.17% and Makita shedding 2.2%.

Mizuho Financial slipped 0.97% after a report that the regulator would oversee system management at the banking group following a series of technical failures.

Peer Mitsubishi UFJ Financial Group gained 2.25% after it said it would pull back from U.S. retail banking with the $8 billion sale of MUFG Union Bank.

Real estate sector was the best performer among the bourse's 33 sectoral indexes, with Mitsui Fudosan gaining 2.36% and Tokyo Tatemono rising 1.18%.

Heavyweight tech start-up investor SoftBank Group advanced 1.69% and Uniqlo clothing shop-owner Fast Retailing gained 0.95%. (Reporting by Junko Fujita; Editing by Subhranshu Sahu)