* Nikkei edges up after worst week in three months
* Caution dominates ahead of Fed meeting
* Sapporo soars, Nissan climbs
* Pioneer slides
By Elaine Lies
TOKYO, June 22 (Reuters) - Japan's Nikkei stock average edged up 0.1 percent on Monday, with brewer Sapporo Holdings and car maker Nissan Motor Co making robust gains but caution about a possible correction for overall market remained strong.
Pioneer Corp fell 5.7 percent after the struggling electronics maker said it would postpone a plan to raise 2.5 billion yen by selling new shares to Honda Motor as it was talking with potential additional financial partners.
The benchmark Nikkei on Friday posted its worst week in three months, but market analysts said trade was likely to be narrow ahead of the Federal Reserve board meeting later this week.
"There's no real reason to sell, but there are also very few reasons to buy," said Yutaka Miura, a senior technical analyst at Mizuho Securities.
"The Nikkei, as with other stock markets, is waiting for signs about whether the recent rally has ended or whether it will continue."
The Federal Reserve's Open Market Committee meets on Tuesday and Wednesday, with markets waiting to see what is said about the economic outlook, a rise in Treasury debt yields, and whether the Fed makes any move to expand or extend its debt buyback programme.
"There's a lot of concern about rising U.S. interest rates, so markets are watching this with keen attention," said Noritsugu Hirakawa, a strategist at Okasan Securities. The benchmark Nikkei gained 9.76 points to 9,796.02 in very light trade after falling 3.5 percent last week, its worst weekly performance in three months.
The broader Topix rose 0.2 percent to 920.93.
Market players have said the market may be due for a breather given the Nikkei's steep gains during its three-month rally, which lifted it some 45 percent from a March 10 low to an eight-month high on June 12. This may last until mid-July, when companies start to report earnings, they add.
"I think nobody doubts that the market has bottomed out, but for us to see real recovery we need signs of hope in macroeconomic indicators," said Masayoshi Okamoto, head of dealing at Jujiya Securities.
SAPPORO SOARS
Sapporo Holdings soared 18 percent to 512 yen after Credit Suisse raised its rating on the brewer to "outperform" from "underperform", saying the market is likely to come to regard the company more as a real estate stock given its heavy dependence on its property business.
Chugai Pharmaceutical climbed 1.7 percent to 1,833 yen, after Nikko Citigroup analyst Hidemaru Yamaguchi raised his target price for Chugai to 2,300 yen from 1,600 yen and upgraded the shares to "buy" from "hold" in a research note.
Other drugmakers also gained, with Takeda Pharmaceutical up 1.6 percent to 3,810 yen and Astellas Pharma Inc rising 1.2 percent to 3,470 yen.
Nissan Motor Co rose 3.7 percent to 588 yen after the Nikkei business daily said it plans to invest up to 100 billion yen ($1 billion) to produce electric cars at a U.S. plant in Tennessee, and would build a facility for lithium-ion batteries with battery partner NEC Corp.
A spokeswoman said Nissan had already announced plans to build electric cars in Japan, North America and Europe, but investment amounts and other details had not been decided.
Resource-linked shares, led by trading houses, retreated after copper extended losses and crude oil, which fell more than 2 percent in the previous session, edged lower.
Sumitomo Corp fell 4.5 percent to 999 yen and Marubeni Corp lost 2.5 percent to 430 yen.
Oil and gas field developer Inpex lost 2.6 percent to 747,000 yen.
Volume was light, with 947 million shares changing hands, compared to last week's morning average of about 1.3 billion shares.
Advancing shares outnumbered declining shares by 1,078 to 501 on the Tokyo exchange's first section. (Reporting by Elaine Lies; Editing by Edwina Gibbs)