* Chip-related shares underperform
* News of TSE-OSE tie-up talks has little impact
* High dividend yield stocks outperform
By Ayai Tomisawa
TOKYO, March 10 (Reuters) - Japan's Nikkei average fell on Thursday after U.S. Stocks were weaker but buying of stocks with high dividend yields may limit the decline as the March ex-dividend date nears.
Chip-related shares underperformed the overall market after the PHLX semiconductor index fell 3 percent, hit by a weaker outlook from Texas Instruments .
With the settlement of Nikkei 225 futures and options coming up on Friday, moves by commodity trading advisers in futures, which have sparked big swings in the benchmark recently, are also in focus.
"The market may move in a narrow range today," said Masumi Yamamoto, a market analyst at Daiwa Securities Capital Markets. "Investors are still concerned about developments in the Middle East, so oil prices during the day may decide the market's direction."
Stocks with high dividend yields outperformed ahead of the March ex-dividend date.
"Domestic-demand shares in this category may outperform," said Hiroichi Nishi, general manager at Nikko Cordial Securities. Such stocks include companies in the utility and oil sectors, he said.
The benchmark Nikkei shed 1.1 percent to 10,474.45 points. The broader Topix index fell 1.3 percent, to 932.48.
Analysts saw near-term resistance for the Nikkei at its 25-day moving average, now at 10,630.58.
Tokyo Electron dropped 1.5 percent to 5,200 and Sumco fell 2.6 percent to 1,454 yen, hit by Texas Instruments' weak outlook.
Osaka Securities Exchange Co gained 7.3 percent to 462,000 yen as the bourse and the Tokyo Stock Exchange planned to start talks as early as this month about a possible business integration, a source familiar with the matter said on Thursday.
The Osaka exchange said in a statement that it could not confirm whether it was in merger talks with another exchange.
Market observers said that, although the immediate impact on the market was limited, sentiment should be positive in the long run.
"Given the merger talks between NYSE Euronext and Deutsche Boerse, this move should be taken positively if it's true," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
"Excluding a few stocks like Nintendo, the OSE does not have any appealing stocks for the cash market. If the OSE can focus on futures trade while the TSE could absorb the cash trade, there may be good synergies and they could efficiently reduce personnel levels and costs."
Stocks with high dividend yields outperformed, with Tokyo Electric Power gaining 0.5 percent to 2,154 yen and Tokyo Gas adding 0.6 percent to 364 yen. (Reporting by Ayai Tomisawa; Editing by Edmund Klamann)