SINGAPORE, Nov 21 (Reuters) - Japan's Nikkei share average was flat on Monday, hovering below 28,000, as rising COVID-19 cases in China cast a pall over investors' mood in Asia and traders awaited more clarity on the direction of interest rates and inflation.

The Nikkei was flat at 27,889 just after the lunch break. The broader Topix was flat at 1,967. Both indexes have been treading water for about a week. Volumes were expected to be light due to U.S. and Japanese holidays later in the week.

"Financial markets are trying to find the balance between the room for further rate hikes versus the extent to which the U.S. and global economy will slow," said Masayuki Kichikawa, Chief Macro Strategist at Sumitomo Mitsui Asset Management.

Japan's economy, he said, was looking steady as the post-pandemic reopening gathers pace and inflation finally picks up after years of deflation, although the global outlook and its implications for Japan's exporters kept markets cautious.

Sapporo Holdings Ltd led gains with a 3% rise. Re-opening hopes have driven the brewer's stock more than 7% this month and it is on course for a fourth consecutive monthly rise.

Trading houses have also performed well, benefiting from high and volatile commodity and energy prices. Shares in Marubeni were up 2% at lunchtime and touched a record high of 1,514 yen in morning trade. They are up 34% this year.

Those rises were offset by falls led by insurer Sompo Holdings, which fell 9% after reporting a six-month net loss aftermarket on Friday. Soft results earlier in the month have also been a drag on Nintendo and shares fell 1%.

The volume of shares traded on the Tokyo Stock Exchange's main board was 0.52 billion, compared to the average of 1.28 billion in the past 30 days. The dollar was steady at 140.38 yen during the session. (Reporting by Tom Westbrook in Singapore; Editing by Savio D'Souza)