(Updates with closing prices)

By Kevin Buckland

TOKYO, June 1 (Reuters) - Japan's Nikkei share average

topped 67,000 for the first time on Monday, powered by

AI-related stocks, as startup investor SoftBank Group overtook

Toyota Motor ( TM ) to become the country's most valuable company.

The Nikkei climbed as much as 1.4% to touch a record

67,231.28 before ending the day with a 0.9% gain at 66,934.33.

SoftBank was by far the biggest support for the

Nikkei, jumping 14% to contribute 845 points to the rally, more

than the index's net total 605-point rise.

The company's market capitalisation swelled to around 48.8

trillion yen ($306.0 billion) while Toyota's ( TM ) shrank to

around 45.9 trillion yen after the stock slid 4.5% on Monday.

Over the weekend, SoftBank pledged some €75 billion ($87.3

billion) over five years to build up AI infrastructure in

France.

The split between tech shares and the rest of the market was

clear from the performance of the broader Topix, which

sagged 0.4%.

"Despite concentration risks and rising volatility, the AI

theme continues to be underpinned by strong earnings,"

strategists at Jefferies wrote in a research report.

"This rally is fundamentally driven, and the message is

clear: follow the earnings momentum."

Both the Nikkei and Topix notched all-time highs on Friday on

optimism over a near-term peace deal in the Middle East, but the

fresh week began with Washington and Tehran still appearing to

differ on significant issues.

"Uncertainty regarding the situation in the Middle East

seems to be intensifying," and that is weighing on the broad

market because "we're in a situation where concerns about

overvaluation are deep-rooted," said Maki Sawada, a strategist

at Nomura Securities.

At the same time, "given the current expectations for

expanding demand for AI servers, buying interest is spreading to

AI-related stocks that had been lagging behind," such as

electronic component maker Murata Manufacturing ( MRAAF ), whose

shares jumped 9%, she said.

Among the Tokyo Stock Exchange's 33 industry groups, seven

rose, led by a 5.6% jump in IT firms. Auto shares

were among the worst performers, down 3.8%.

Even in the Nikkei, only 70 of its 225 components rose,

versus 155 that fell.

Not all chip-related shares advanced, with Advantest ( ADTTF )

retreating 1.9% and Fujikura ( FKURF ) down 2%.

($1 = €0.8588)

($1 = 159.4800 yen)