TOKYO - Japan's Nikkei breached a key psychological level on Wednesday, lifted by retailers, although sentiment remained tentative compared with global peers that were boosted by the prospect of central banks tempering their aggressive tightening policies.

The Nikkei share average broke through the key barrier of 27,000 for the first time since Sept. 22, and closed 0.48% higher at 27,120.53 on Wednesday.

The broader Topix index gained 0.32%.

Despite strong performances from individual stocks, the market lacked clear direction with many domestic participants awaiting further signs of economic health from the United States, including the release of key jobs data later in the day.

"The Reserve Bank of Australia may have slowed the pace of its interest rate hikes, but it's unclear whether the U.S. Federal Reserve will follow," said Masahiro Yamaguchi, head of investment research at SMBC Trust Bank. "We still need to watch for economic data and statements from Fed officials."

Fast Retailing Co Ltd rose 0.92% and had the biggest positive impact on the Nikkei after announcing an 11% year-on-year sales increase at domestic Uniqlo stores. The number of its customers declined 2.9%, but average spend was up 14.4% due to price increases and stronger sales of fall/winter items.

Shares of ABC-Mart Inc rose 3.69% on upbeat September numbers and year-on-year sales. The footwear and sporting goods retailer is expected to get a boost from the upcoming World Cup.

Retail company Arclands Corp jumped 10.33% after a regulatory filing revealed that a fund linked to activist investor Yoshiaki Murakami had taken a 5.06% ownership stake.

Toyo Engineering Corp rose 0.69% and Mitsubishi Corp traded flat after Alaska Gasline Development Corporation said it would work with both companies to study the possibility of producing ammonia in the state.

The Nikkei's gains were muted in comparison with its peers, many of which rose after a smaller-than-expected rate hike from the Reserve Bank of Australia and soft U.S. jobs data.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 2.6%, while the S&P 500 index and the Nasdaq 100 each gained more than 3% overnight.

Of the Nikkei's 225 constituents, 119 advanced, 100 declined, and six traded flat.

Nippon Sheet Glass Co Ltd made the biggest loss with a 4.3% drop.

Shares of Ryohin Keikaku Co Ltd, the parent company of lifestyle store Muji, fell 3.19% after reporting a nearly 14% drop in September sales.

(Reporting by Sam Byford and Tokyo markets team; Editing by Sherry Jacob-Phillips)