TOKYO, May 23 (Reuters) - Japan's Nikkei share average

rose on Thursday led by a rally in technology stocks, after U.S.

peer Nvidia's ( NVDA ) earnings delivered on sky-high expectations,

although concerns about the domestic central bank's policy

outlook limited gains.

Markets were not disappointed in the week's most

closely-watched event, with Nvidia ( NVDA ) hitting a record

high after the U.S. chipmaker forecasted quarterly revenue above

estimates on Wednesday and announced a stock split.

"Nvidia ( NVDA ) earnings were better than expected, so that was

definitely positive for Japanese tech stocks, especially

semiconductor-related companies," said Kenji Abe, equities

analyst at Daiwa Securities.

With the rally in artificial intelligence-related stocks

getting a reassuring boost, tech shares led gains on the Nikkei

share average, which was up 0.77% at 38,913.48 by the

midday break.

The broader Topix was up 0.37% at 2747.49.

Chip-related shares have been among the Nikkei's best

performers over the past year, helping the benchmark index climb

to a record intraday high of 41,087.75 in March.

But gains were subdued outside of tech on Thursday, and a

little less than half of the Nikkei's 225 constituents declined.

Caution regarding the Bank of Japan's policy path weighed on

sentiment, in the wake of an unexpected cut to the bank's bond

offer amounts last week and recent hawkish signals, analysts

said.

Japan's 10-year government bond yield rose to a more than

decade high of 1% on Wednesday, a psychologically significant

level that brings the market's policy concerns back to the

forefront.

On Thursday, AI-focused startup investor SoftBank Group

, up 3.6%, and chip-making equipment giant Tokyo

Electron ( TOELF ), climbing 1.1%, together added almost 100

points to the Nikkei's 296-point gain.

Chip-testing equipment maker Advantest ( ADTTF ), which

counts Nvidia ( NVDA ) among its customers, rose 3.5% to contribute

another 51 points.

Chip manufacturer Disco Corp ( DISPF ) surged 6.8%.

Among decliners, videogame maker Nexon ( NEXOF ) slid 4.7% to

the bottom of the pack, while mobile phone company KDDI ( KDDIF )

fell 1.1%. Chugai Pharmaceutical ( CHGCF ) lost 2.3%.