(Updates with levels as of 0600 GMT)

By Brigid Riley

TOKYO, Aug 20 (Reuters) - Japan's Nikkei share average

closed higher in a widespread rally on Tuesday, supported by a

softer yen and technology share gains, as an encouraging U.S.

economic outlook continued to support risk appetite globally.

The Nikkei rose more than 2% during the session

before finishing up 1.8% at 38,062.92, its highest closing level

since Aug. 1.

The broader Topix rose 1.1% to 2,670.54.

Domestic tech stocks tracked their U.S. peers higher to help

lift the overall benchmark index, as Wall Street continued to

rebound from a steep sell-off seen two weeks ago.

"The theme these days were concerns over a recession in the

United States are lessening," said Hiroshi Namioka, chief

strategist and fund manager at T&D Asset Management.

"The fact that U.S. stocks are performing solidly now is

having a relatively positive effect on Japanese shares."

Recent U.S. data revived expectations of a soft landing for

the world's largest economy. Market players now await Federal

Reserve Chair Jerome Powell's remarks on Friday at the Jackson

Hole Economic Symposium for hints on the Fed's rate path.

AI-focused startup investor SoftBank Group gained

3.1%, while chip-related shares Tokyo Electron ( TOELF ) and

Advantest ( ADTTF ), rallied 1.6% and 2.1%, respectively. TDK

Corp ( TTDKF ) was up 1.3%.

A pause in the yen's climb on Tuesday reassured

investors, although analysts said the stock market remains

sensitive to moves in foreign exchange.

The Japanese currency was last hovering around 147.29 yen

per dollar in a boost to Toyota Motor ( TM ), up 1%,

and other export-related shares.

Gains were widespread though, with 204 of the Nikkei's 225

constituents rising against 20 decliners. One share was

untraded.

Among individual shares, Uniqlo parent firm and Nikkei

heavyweight Fast Retailing ( FRCOF ) surged 3.6% to give the

index the biggest lift.

Shares of Seven & I Holdings ( SVNDF ) slumped over 10%,

shedding some of Monday's gains made on news of a takeover

proposal from Canada's Alimentation Couche-Tard ( ANCTF ).