Japan's Nikkei share average edged up on Thursday, although wider gains in industrial-related stocks were offset by weakness in banking shares as activity waned heading into the year-end.

The Nikkei was up 0.15 per cent at 22,945.67 at the end of morning trade. The broader Topix was nearly flat, up 0.01 per cent at 1,829.99. Friday is the last trading day of 2017, for which the Nikkei is on track to have gained more than 20 per cent.

Stronger sectors included textiles, up 0.6 per cent, iron and steel, up 0.6 per cent, and non-ferrous metals, up 0.7 per cent. The banking subindex slumped 0.7 per cent, with Mitsubishi UFJ Financial Group down 1.3 per cent.

Idemitsu Kosan Co shares dropped 1.8 per cent. The oil company's founding family, locked in a battle with the firm's management over a proposed integration with smaller rival Showa Shell Sekiyu, said it had further increased its stake in Idemitsu by about half a percentage point to about 28.5 per cent. Nippon Sheet Glass Co fell 3.1 per cent, a day after it cut its fiscal year net profit forecast.

Underpinning market sentiment, data released early on Thursday showed Japan's industrial output rose more than expected in November and companies forecast a further increase in December as robust overseas demand continues to support factory activity and broader economic growth. Separate capital flows data showed foreign investors turned net buyers of Japanese stocks for the week ending on December 23.

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