TOKYO, May 29 (Reuters) - Japan's Nikkei share average

rose toward a record on Friday, powered by renewed optimism for

a near-term peace deal in the Middle East and enthusiasm about

AI shares after strong earnings from Dell Technologies ( DELL ).

The Nikkei climbed as much as 2.1% in early trading

to reach 66,041.83, putting it not far from Wednesday's all-time

peak of 66,428.81.

The broader Topix advanced as much as 1.5% to touch

3,961.31, approaching Wednesday's lifetime high of 3,971.77.

Sources told Reuters that the U.S. and Iran have reached an

agreement to extend their ceasefire and lift restrictions on

shipping, though U.S. President Donald Trump has yet to approve

it, and Iranian state media said it had not been finalised.

Conflicting headlines in recent days around progress in

negotiations between Washington and Tehran have seen stocks

swing, but for the week, the Nikkei and Topix were on track for

gains of 4.1% and 1.5%, respectively.

The Nikkei has outperformed largely due to its high

concentration of tech stocks, and heavy weighting for some

darlings of the AI trade, such as startup investor SoftBank

Group, which soared 5.9% on Friday.

On Thursday, Dell raised its annual revenue and

profit forecasts, showing data center expansion by clients is

fueling demand for its AI-optimized servers.

"Dell Technologies ( DELL ) commented that there is no sign of a

slowdown in AI demand," driving a sharp rise in Japanese AI

stocks such as SoftBank, said Wataru Akiyama, a strategist at

Nomura Securities.

Meanwhile, "announcements from both the U.S. and Iran

suggesting progress toward a provisional agreement have provided

a sense of reassurance to the market," buoying stocks more

broadly, he said.

Of the Nikkei's 225 components, 173 rose versus 50 that

fell, with two trading flat.

Silicon maker Sumco ( SUMCF ) soared more than 18%, making it

the index's biggest percentage gainer.

However, not all AI shares got a lift from Dell,

with data center cable makers Fujikura ( FKURF ) and Furukawa

Electric ( FUWAF ) dropping 6.2% and 4.6%, respectively, to be

among the Nikkei's worst performers.