TOKYO, May 16 (Reuters) - Japan's Nikkei share average

rose on Thursday as technology stocks tracked their overseas

peers higher after U.S. consumer prices boosted market

expectations for the Federal Reserve to cut rates in September.

The closely watched U.S. CPI report on Wednesday showed

prices increased less than expected in April, suggesting that

inflation resumed its downward trend.

That gave the green light to investors to keep buying, with

Wall Street's three major indexes notching record closes

overnight.

Positive sentiment continued in Asian hours, with the Nikkei

up 0.74% at 38,669.57 by the midday break.

"The mood is one of relief," said Kyle Rodda, senior

financial market analyst at Capital.com.

"If nothing else, (Wednesday's CPI) says a serious

discussion about the need for further hikes has been taken off

the table."

Technology shares pulled the bulk of the weight on

Thursday, riding high on a boost from their U.S. peers after the

S&P 500's rate-sensitive tech stocks led sector gains.

The yen's appreciation following U.S. CPI, however, weighed

on export-related shares including index heavyweight Toyota

Motor ( TM ), down 2.4%, which tend to benefit from a softer

yen.

Honda Motor ( HMC ) and Suzuki Motor ( SZKMF ) also

dragged, declining 2.7% and 3.5%, respectively.

The broader Topix was down 0.26% at 2723.69.

Still, as the yen spiralled to its weakest in 34 years,

the risk of currency intervention has kept investors on alert,

and a rise in Japanese government yields has also weighed, said

Capital.com's Rodda.

"With those risks diminishing, the Nikkei has the clear air

it needs to renew its uptrend."

Among other individual stocks, chip-related shares Tokyo

Electron ( TOELF ), up 3.3%, and Advantest ( ADTTF ), rising 3%,

added about 157 points to the Nikkei's near 284-point jump.

AI-focused startup investor SoftBank Group gained 2%.

Meanwhile, shares of Recruit Holdings ( RCRRF ) was up 6.6%

on the staffing agency and publisher's upbeat revenue release.

Mitsubishi UFJ Financial Group ( MUFG ) fell 5.4%, despite

posting a narrower-than-expected decline in fourth-quarter

profit on Wednesday. The firm forecasted only a slight profit

growth in the current financial year.