Japan's Nikkei hits 3-month high as AI shares rally

By Junko Fujita

TOKYO, Oct 5 (Reuters) - Japan's Nikkei share average rose more than 2% to a three-month high on Monday, boosted by AI-related stocks, following gains on Wall Street at the end of last week.

The Nikkei .N225 rose 2.53% to 70,037.61, its highest level since early July, by the midday break.

The broader Topix .TOPX rose 1.16% to 4,138.57.

"Investors scooped up AI-related stocks, but the market sentiment is muted compared with earlier this year when the Nikkei hit a record high," said Mamoru Shimode, chief strategist at Resona Asset Management.

"The AI rally will continue, but the markets will be more selective."

US stocks advanced on Friday after weaker-than-expected jobs data dampened expectations for a rate hike from the Federal Reserve at its policy meeting this month. .N

In Japan on Monday, chip-related Advantest 6857.T and Tokyo Electron 8035.T rose 4.5% and 5.7%, respectively, to provide the biggest boosts to the Nikkei. Technology investor SoftBank Group 9984.T rose 3.68%.

Memory maker Kioxia 285A.T edged up 0.49%. The shares trade nearly 50% below the record high set in mid-June.

"Investors probably tried to buy Kioxia shares on the rise, but at the same time others who have losses in the shares sold stocks on a rally, which is why their gains are limited," Shimode said.

Bank shares rose, with Mitsubishi UFJ Financial Group 8306.T and Mizuho Financial Group 8411.T rising 0.99% and 1.86%, respectively.

The Topix growth share index .TOPXG rose 1.46%, while the value share index .TOPXV gained 0.89%.

Of more than 1,500 stocks on the Tokyo Stock Exchange's prime market, 53% rose, 42% fell, and 3% traded flat.