TOKYO, Sept 2 (Reuters) - Japan's Nikkei share average

rose on Monday to touch the 39,000 level for the first time

since late July, helped by a softer yen and Wall Street's gains

at the end of last week.

The Nikkei had risen 0.2% to 38,709.88 by the midday

break. It hit its highest since July 31 at 39,080.64 earlier in

the day before profit-taking started as the yen's slide stalled.

The broader Topix was flat at 2,712.56.

Wall Street stocks gained on Friday after fresh economic

data raised expectations that the U.S. Federal Reserve would cut

interest rates modestly in September. U.S. markets are closed on

Monday for a public holiday.

The dollar gained against the yen following the latest U.S.

economic data, lifting the shares of Japanese exporters.

A softer Japanese currency helps exporters as it increases

the value of overseas profits in yen terms when firms repatriate

them to Japan.

Uniqlo parent and Nikkei heavyweight Fast Retailing ( FRCOF )

was last up 0.5%, while Toyota Motor ( TM ) edged up 0.9%,

Honda Motor climbed 1.6% and Mazda ( MZDAF ) gained

0.8%.

The transport equipment sector, which was the top

performer in early trade, cut gains to finish the morning

session up 0.8%.

Global stock markets fell sharply early last month on fears

of an imminent recession in the world' largest economy, but

economic data has since buoyed expectations of a soft landing.

Markets remain focused on U.S. labour data though, putting

attention this week on the weekly unemployment numbers due on

Thursday and August non-farm payrolls due on Friday.

Some market participants are still worried about risks of a

possible hard landing, "so unless that is dismissed, it will be

difficult for the Nikkei to exceed 39,000 points and keep

rising," said Masayuki Kubota, chief strategist at Rakuten

Securities.

Investors will also be monitoring the yen's direction as

well, he added.

The largest percentage gainer on the Nikkei was IHI Corp ( IHICF )

with a rise of 4.5%, followed by Kawasaki Heavy

Industries ( KWHIF ), which was up 3.8%, and Advantest Corp ( ADTTF )

, which climbed 3.2%.

(Reporting by Brigid Riley; Editing by Subhranshu Sahu)