TOKYO, June 24 (Reuters) - Japan's Nikkei share gauge fell

for a second day on Wednesday, as concerns over potential

interest rate hikes by the Federal Reserve and valuations in the

AI sector weighed on sentiment.

The benchmark Nikkei 225 slid 0.56% to 69,396.61,

retreating further from a record high reached on Monday. The

broader Topix slipped 0.31% to 3,977.91.

The decline followed overnight losses in U.S. equities,

where the Philadelphia Semiconductor Index sank 7.9% amid

worries about debt-funded AI spending and tighter financial

conditions.

"Speculation that the Federal Reserve is moving toward

interest rate hikes has heightened concerns about rising

financing costs for AI capital expenditures, which appears to

have accelerated the decline in semiconductor stocks," Sony

Financial Group analysts said in a note.

There were 113 advancers on the Nikkei 225 against 111

decliners and one unchanged.

Chip-related shares were among the laggards, with Tokyo

Electron ( TOELF ) dropping 3.6% and Disco losing 4.3%.

Insurance stocks also fell sharply, led by T&D Holdings ( TDHOF )

, which slid 3.7%. On the upside, retail shares gained,

with J. Front Retailing ( JFROF ) surging 6.3%.

(Reporting by Rocky Swift in Tokyo; Editing by Subhranshu Sahu)