(Updates prices to midday close, adds analyst comments in

paragraphs 6-8)

By Kevin Buckland

TOKYO, July 31 (Reuters) - Japan's Nikkei share average

jumped more than 4% on Friday, buoyed by a rally on Wall Street

as Microsoft ( MSFT ) led a rebound in tech shares after

delivering forecasts that eased fears about the industry's

massive AI infrastructure spending.

The Bank of Japan is widely expected to keep monetary policy

steady later in the day.

The Nikkei ended the morning session up 4.4% at

64,572.25 after surging as much as 5.7% at one point. The

broader Topix rose 1.5%.

Chip-testing equipment manufacturer Advantest ( ADTTF )

soared 17% and AI-focused startup investor SoftBank Group

leapt more than 15%.

Overnight, the U.S. S&P 500 gained 1.7% and the

tech-heavy Nasdaq climbed 2.8%. Microsoft ( MSFT ) surged 15.5%

after forecasting quarterly sales and cloud growth above

expectations.

"It confirmed continued strong demand for AI," said Nomura

strategist Maki Sawada.

"The U.S. rally is having a big impact on Japanese shares

today."

Japanese intervention to prop up the yen on Thursday, which

catapulted the currency as much as 3.6% from near a four-decade

low to the U.S. dollar, has largely been ignored by the stock

market, Sawada said.

However, automakers declined as a group on Friday, with

Toyota ( TM ) down 1.9% and Honda ( HMC ) losing 2.9%. A

stronger yen lowers the value of overseas revenue when

repatriated.

The BOJ's announcement does not come at a set time, but is

expected around 0330-0430 GMT.

The central bank is likely to hold the key rate steady at 1%

and signal its resolve to continue pushing up borrowing costs as

mounting price pressures from a weak yen and the Middle East

conflict risk driving underlying inflation above its target.

(Reporting by Kevin Buckland; Editing by Subhranshu Sahu)