(Updates at 0600 GMT)

TOKYO, July 9 (Reuters) - Japan's Nikkei share average

rose to a record close on Tuesday, with chip-related stocks

following their U.S. peers higher as investors awaited testimony

from Federal Reserve Chair Jerome Powell for clues on the path

of interest rates.

The Nikkei closed 1.96% higher at 41,580.17, after

rising as much as 2.4% to a record intraday high of 41,769.35.

"The market expects Powell's comments will indicate policy

easing, which lifted U.S. chip stocks overnight and the Japanese

chip makers tracked the trend," said Takehiko Masuzawa, trading

head of Phillip Securities Japan.

The S&P 500 and Nasdaq notched record closing highs on

Monday, with Nvidia ( NVDA ) rising 2% and Intel ( INTC )

rallying more than 6%. The Philadelphia semiconductor index

jumped 1.9%.

Powell will deliver two days of testimony before Congress,

beginning later in the day with the Senate and followed by the

House on Wednesday.

Traders now see a more than 75% chance of an interest rate

cut of at least 25 basis points by September, up from last

week's 60%, according to CME's FedWatch.

In Japan, chip-making equipment maker Tokyo Electron ( TOELF )

jumped 3.77% and chip-testing equipment maker Advantest ( ADTTF )

climbed 4.14%.

Uniqlo-brand owner Fast Retailing ( FRCOF ) rose 3.22%.

The Fed rate-cut expectations weighed on Japanese banks,

sending the banking index 0.7% lower.

The index for value shares rose 0.52%, while the

growth stock index jumped 1.46%.

The broader Topix ended 0.97% higher at 2,895.55,

after hitting a record intraday peak of 2,907.21.

Investors were cautious about the possible impact of a

sell-off in exchange-traded funds on Wednesday, a move to

distribute payouts, which market players estimate to be worth

about 750 billion yen ($4.66 billion), said Phillip Securities

Japan's Masuzawa.

The Nikkei is overshooting, rising to a level that is not

justified by the domestic corporate outlook, said Jun Morita,

general manager of the research department at Chibagin Asset

Management.

($1 = 160.9800 yen)

(Reporting by Junko Fujita; Editing by Mrigank Dhaniwala and

Subhranshu Sahu)