* Nikkei sheds 0.8 pct, Topix down 1 pct

* U.S. budget, debt ceiling standoff weighs on sentiment

* Investors focusing on earnings amid uncertain macro

picture

* BOJ widely expected to keep policy unchanged

TOKYO, Oct 4 (Reuters) - The Nikkei share average fell to a

one-month low on Friday morning as a lack of progress in the

U.S. budget standoff raised concerns the crisis will drag on

until the next important deadline in mid-October to raise the

federal debt ceiling.

Investors are focusing on upcoming corporate earnings after

Japanese Prime Minister Shinzo Abe's economic stimulus announced

earlier this week failed to provide an additional boost to the

market.

The benchmark Nikkei was down 0.8 percent at

14,032.26, its lowest level since Sept. 6, in midmorning trade,

after shedding 2.3 percent in the past two sessions. The index

is still up 35 percent this year.

"Abe's speech on Oct. 1 marked an end of big-picture

positives supporting the Japanese rally. After that, the market

has refocused on what's going on in the U.S. and domestically,

on first-half corporate earnings," said Stefan Worrall, director

of equity cash sales at Credit Suisse in Tokyo.

"My clients are asking lots of questions about which

companies look like they will beat earnings expectations. That's

only occurred in the last few days."

Worrall added he is confident that bullishness will return

to the Japanese market once the U.S. political drama is

resolved.

While some traders see the 14,000 level as support, there

could be more hedge-selling from option players if that level is

broken because there are a large amount of put-option positions

with a strike price at that level.

The broader Topix shed 1 percent to 1,162.24 in

relatively light trade, with volume at 36.3 percent of its full

daily average for the past 90 trading days.

Exporters were weak after the dollar slid to a five-week low

of 96.93 against the yen in overnight trade. The greenback last

traded at 97.13. A firmer yen lessens Japanese exporters'

competitive edge in global markets.

Panasonic Corp dropped 3.5 percent, Sony Corp

fell 2.4 percent and Daikin Industries Ltd

lost 2.3 percent.

Index heavyweight SoftBank Corp dipped 2.9 percent,

hit by profit-taking after the tech and telecoms company hit a

13-1/2-year high on Thursday. It was the most-traded stock by

turnover on the main board.

Investors are also looking for leads from the Bank of

Japan's two-day policy board meeting ending later in the day.

The central bank is expected to maintain its massive stimulus

and reiterate its upbeat view that the economy is strong enough

to weather next year's sales tax increase without additional

monetary policy measures.