(Updates with mid-day closing prices, adds comments and

details)

By Junko Fujita

TOKYO, Oct 7 (Reuters) - Japan's Nikkei share average

climbed to a record high on Tuesday, as chip-related stocks

tracked upbeat U.S. peers, though the benchmark index pared

early gains after investors booked profits from a recent rally.

The Nikkei was up 0.67% at 48,264.98 by the

midday break, after rising as much as 1% to a record high of

48,527.33 earlier in the session.

The broader Topix edged 0.28% higher to 3,235.15.

"Investors booked profits at a high of the Nikkei so the

gains were muted, but the momentum is still strong," said

Kazuaki Shimada, chief strategist at IwaiCosmo Securities.

The Nikkei surged 4.8% in the previous session, marking

its biggest single-day gain since early April, after Sanae

Takaichi was all but confirmed to become the country's next

premier, boosting expectations of renewed fiscal stimulus and

loose monetary policy.

"Behind the Takaichi trade, there is strong support from

gains of U.S. artificial intelligence-related firms. So,

AI-related shares such as Advantest ( ADTTF ) and SoftBank Group would

rise regardless of who becomes Japan's prime minister," said

Shimada.

Chip-testing equipment maker Advantest ( ADTTF ) rose

2.57%, while SoftBank Group, an investor in AI-related

firms, climbed 2.74%.

Chip-making equipment maker Tokyo Electron ( TOELF ) reversed

early losses to trade nearly 1% higher.

Cable maker Fujikura ( FKURF ), a gauge for data centre

investments, surged 7.9% to become the top percentage gainer in

the Nikkei.

The S&P 500 and the Nasdaq reached record

closing highs on Monday, as AI-related dealmaking boosted

investor sentiment even as the U.S. government shutdown extended

through its sixth day.

The market lacked the momentum seen in the previous

session, with nearly half of the stocks declining, said Yugo

Tsuboi, chief strategist at Daiwa Securities.

Of more than 1,600 stocks trading on the Tokyo Stock

Exchange's prime market, 44% fell, 50% rose and 4% traded flat.