(Updates with closing prices)

By Junko Fujita

TOKYO, Aug 5 (Reuters) - Japan's Nikkei share average

ended higher on Tuesday, tracking Wall Street's strong finish

overnight, while losses in chip-related stocks capped gains.

The Nikkei snapped two straight sessions of losses

to end 0.64% higher at 40,549.54.

The broader Topix climbed 0.7% at 2,936.54.

On Monday, all three major U.S. stock indexes logged

their steepest daily percentage climb since May 27, as investors

sought bargains after Friday's selloff and ramped up bets for a

September rate cut following a weaker-than-expected jobs data.

In Japan, Mitsubishi Heavy Industries ( MHVYF ) jumped 5.72%

as the heavy machinery maker clinched a landmark A$10 billion

($6.5 billion) deal to build Australia's next-generation

warships.

Technology investor SoftBank Group rose 2.68%

to lend the strongest boost to the Nikkei.

Of the more than 1,600 stocks trading on the Tokyo Stock

Exchange's (TSE) prime market, 74% rose, 21% fell and 3% traded

flat.

All but three of the TSE's 33 industry sub-indexes advanced,

with the nonferrous metals sector climbing 3.68% to become the

top-performing sector.

Cable maker Furukawa jumped 7%, and its peers

Sumitomo Electric and Fujikura ( FKURF ) rose 4.9% and

3.94%, respectively, reflecting expectations for robust

investments in data centres.

Chip-making equipment maker Tokyo Electron ( TOELF ) fell

0.4% and chip-testing equipment maker Advantest ( ADTTF ) pared

losses to end flat.

"Those shares led the Nikkei's rally last month, but so

far they have lost that strong momentum," said Shuutarou Yasuda,

a market analyst at Tokai Tokyo Intelligence Laboratory.

Markets were jolted last week when shares of Tokyo Electron ( TOELF )

plunged, hitting their daily limit, after the firm slashed its

profit forecast by a fifth.