TOKYO (AFP) - Tokyo stocks opened 0.20 per cent higher on Tuesday, following a choppy session on Wall Street as investors weighed the impact of the Iraq crisis and an upcoming US Federal Reserve meeting.

The Nikkei 225 index was up 29.70 points at 14,962.99 at the start.

The Japanese currency was steady, with the dollar fetching 101.87 yen in Asia compared with 101.84 yen in US trade Monday afternoon.

The euro bought US$1.3578 and 138.30 yen, up from US$1.3570 and 138.20 yen.

Besides the fighting in Iraq, where militants were battling security forces for control of a strategic northern town, a US Federal Reserve policy decision on Wednesday was also driving trade.

"The likelihood of a prolonged US rate scenario will weigh on the dollar's rise, normally an important ingredient to Japan stock-market buying," Kenichi Hirano, market analyst at Tachibana Securities, told Dow Jones Newswires.

"But investors have been dip-buying for the last month, defying sometimes weaker-dollar days." Siemens and Mitsubishi Heavy Industries late Monday unveiled the terms of their joint bid for the energy assets of French industrial jewel Alstom, also coveted by US industry giant General Electric.

The bid is significantly less than a preliminary offer Siemens reportedly put on the table in April.

Mitsubishi Heavy was 0.31 per cent lower at 628 yen early Tuesday.