(Updates with prices as of 0230 GMT)

By Brigid Riley

TOKYO, Oct 15 (Reuters) - Japan's Nikkei share average

rose on Tuesday to a three-month high above the 40,000 level, as

Wall Street's strong finish overnight and a weaker yen buoyed

investor sentiment.

The Nikkei gained 1.6% to 40,232.45 by the midday

break, reclaiming the 40,000 level for the first time since July

19, as Japanese markets reopened after a public holiday on

Monday. The broader Topix was up 1.14% at 2,737.

Wall Street ended higher on Monday, with both the S&P 500

and the Dow Jones Industrial Average posting fresh

record finishes. Shares of semiconductor star Nvidia ( NVDA )

rose to a record close as the sector outperformed.

In Japan, chip-related shares tracked their U.S. peers

higher, with Tokyo Electron ( TOELF ) and Advantest ( ADTTF )

rising 5.07% and 3.53%, respectively.

AI-focused startup investor SoftBank Group Corp,

whose subsidiary Arm Holdings climbed overnight, surged

6.85%.

The three stocks together offered the Nikkei a hefty lift.

Japanese equities were also supported by a softer yen, which

tends to boost exporters' overseas earnings when repatriated.

The yen was not far off Monday's low of 149.98, its lowest level

against the dollar since early August.

Among big export names, automaker Toyota Motor ( TM )

edged up 0.39%, while tech and entertainment conglomerate Sony

Group ( SONY ) rose 0.64%.

Along with the softer yen, which is seen benefiting Japanese

firms this quarter, some companies like Fast Retailing ( FRCOF )

have set a positive tone by posting record earnings, said Sean

Teo, a sales trader at Saxo Singapore.

"We might see this trend continue throughout the earnings

season," although U.S. corporate earnings may face challenges

due to a still high-interest rate environment, he said.

The largest percentage gainer in the Nikkei was Lasertec

Corp ( LSRCF ), which rose 7.38%.