April 25 (Reuters) - Foreign investors were net sellers

of Japanese stocks last week, driven by a global decline in

chip-related stocks, profit-taking ahead of earnings reports,

and expectations that U.S. interest rates would stay higher for

longer amid sticky inflation.

Market sentiment was also dampened as a threat of open

warfare erupting between arch Middle East foes Iran and Israel

and dragging in the United States put the region on edge.

Overseas investors sold stocks worth 1.14 trillion yen

($7.33 billion) in the week to April 19, following two weeks of

net purchases, data from stock exchanges showed.

They sold about 554.5 billion yen in derivatives and 592.4

billion yen in the cash equity markets.

Last week, Japan's Nikkei 225 and TOPIX

indexes fell by more than 6% and 4.8%, respectively, pressured

by declines in chip-related stocks.

The drop came after Taiwan Semiconductor Manufacturing ( TSM )

lowered its growth outlook for the chip sector and

maintained its capital spending plans unchanged in its

first-quarter earnings report.

In the bond market, Japanese domestic investors purchased

about 648.1 billion yen in long-term foreign bonds between April

14 and 20, after selling more than 1 trillion yen in the

previous week.

However, they sold 3.2 billion yen in short-term debt

instruments, compared with net inflows in the previous week.

($1 = 155.5800 yen)