(Updates with closing prices)

By Kevin Buckland

TOKYO, July 31 (Reuters) - Japan's Nikkei share average

jumped 4% on Friday, buoyed by an overnight rally on Wall Street

after Microsoft ( MSFT ) issued forecasts that eased fears about

the tech industry's massive AI infrastructure spending.

The Nikkei ended 4% higher at 64,362.02 after

surging 5.7% at one point. The broader Topix rose 1.83%.

The Bank of Japan left interest rates unchanged in a widely

expected decision, while signalling that it would continue with

its tightening campaign and flagging the risk of an inflation

overshoot. However, the announcement had little lasting impact

on the stock market.

Chip-testing equipment manufacturer Advantest ( ADTTF )

soared more than 16% and AI-focused startup investor SoftBank

Group leapt nearly 14%.

Overnight, the U.S. S&P 500 gained 1.7% and the

tech-heavy Nasdaq climbed 2.8%. Microsoft ( MSFT ) surged 15.5%

after forecasting quarterly sales and cloud growth above

expectations.

"It confirmed continued strong demand for AI," said Nomura

strategist Maki Sawada. "The U.S. rally is having a big impact

on Japanese shares today."

Japanese intervention to prop up the yen on Thursday, which

catapulted the currency as much as 3.6% from near a four-decade

low against the U.S. dollar, was largely ignored by the stock

market, Sawada said.

However, automakers declined as a group on Friday, with

Toyota ( TM ) down 1.9% and Honda ( HMC ) losing 2.7%. A

stronger yen lowers the value of overseas revenue when

repatriated.

Sony Group ( SONY ) reversed early losses to rise as much as

4.1% after the company posted strong financial results halfway

through Friday's session. But the stock ultimately shed those

gains to finish down 0.6%.

Panasonic ( PCRFF ) went limit up, leaping 19.5% at the close

after raising its profit outlook on Thursday.

(Reporting by Kevin Buckland; Editing by Subhranshu Sahu)