TOKYO, Aug 25 (Reuters) - Japan's Nikkei share average

rose for a second straight session on Monday, led by tech shares

as the domestic market reacted to optimism for looser monetary

policy in the U.S.

The Nikkei 225 Index gained 0.4% to close at

42,807.82. The broader Topix added just under 0.2%.

SoftBank Group and chip-testing equipment maker

Advantest ( ADTTF ) were among the biggest contributors to the

Nikkei's advance, climbing 3.5% and 1.1%, respectively.

In a closely-watched speech at the Federal Reserve's annual

Jackson Hole symposium on Friday, the central bank's Chair,

Jerome Powell, signalled the possibility of a rate cut next

month.

Going in the other direction, Bank of Japan Governor Kazuo

Ueda highlighted wage growth that is feeding into conditions for

a resumption of interest rate increases.

The divergence in the central bank's policy led to a surge

in the yen, crimping revenue prospects for Japanese exporters.

Increasing prospects for a U.S. rate cut acted as tailwind

for tech stocks on Wall Street and in Japan, said Nomura

strategist Fumika Shimizu.

"As a result, Japanese semiconductor-related stocks are also

showing strength and leading the market," Shimizu said.

"There is a possibility that the recent slight upward trend

in the yen is weighing on the market."

There were 118 advancers on the Nikkei index against 107

decliners.

TOTO ( TOTDF ) jumped 7.9% to be the biggest percentage

gainer on the benchmark after the luxury toilet maker said on

Friday it was opening a $224 million plant in the U.S. southern

state of Georgia, shifting production away from Asia.

The biggest loser on the index was Terumo ( TRUMF ), down 4%,

after saying it would spend $1.5 billion to buy Britain-based

Organox, a maker of organ preservation technology.

(Reporting by Rocky Swift; Editing by Sumana Nandy and Mrigank

Dhaniwala)