(Updates with closing levels)

By Brigid Riley

TOKYO, June 26 (Reuters) - Japan's Nikkei share average

climbed more than 1% to secure a 2-1/2 month closing peak on

Wednesday, as investors snapped up technology stocks and

chip-related heavyweights surged.

The Nikkei rose 1.26% to 39,694.50, its highest

closing level since April 9, after touching a near three-month

intraday high of 39,788.63.

The broader Topix finished up 0.56% to 2,802.95.

Japan's technology-related shares rallied after a lull

earlier this week, following a strong performance by AI chip

firm Nvidia ( NVDA ) and other U.S. tech megacaps overnight.

"The rise in U.S. tech stocks has generated a pretty strong

tailwind" for Japanese equities, becoming the driving force of

the day, said Masahiro Ichikawa, chief market strategist at

Sumitomo Mitsui DS Asset Management.

Advantest ( ADTTF ), which counts Nvidia ( NVDA ) among its customers,

surged 7% to be the largest percentage gainer of the day, while

fellow chip-related firm Tokyo Electron ( TOELF ) added 3.6%.

Together, the two stocks lifted the Nikkei by 231 points.

Electronic machinery makers rose 1.4% to lead

sector gains among the Tokyo Stock Exchange's 33 industry

subindexes.

Market participants may also be re-investing dividend

payouts into the market after a batch of payments this week,

giving some degree of extra support to shares, said Sumitomo

Mitsui DS Asset Management's Ichikawa.

Dividends have increased as Japan pushes for corporate

governance reform. Those reforms have been one of the big

supports that helped the Nikkei reach an all-time peak of

41,087.75 on March 22.

The Nikkei's break higher on Wednesday gave an additional

boost to investor sentiment.

After retreating in April, the index had struggled to get

above the 39,400 level amid tepid company revenue outlooks and

concerns about currency and bond market volatility.

Investors have also been waiting further clarity on the Bank

of Japan's monetary policy path.

On Wednesday, among other heavyweight stocks, Fast Retailing ( FRCOF )

rose 1%, AI-focused startup investor SoftBank Group

gained 1.6%, and electrical components maker TDK

was up 2.5%.