(Recasts 1st paragraph, updates with closing prices)

By Junko Fujita

TOKYO, July 15 (Reuters) - Japan's Nikkei ended higher

on Tuesday as chip stocks rallied after Nvidia's ( NVDA ) plan to resume

AI chip sales in China, with the benchmark shrugging off early

caution over U.S. price data and the election outcome.

The Nikkei closed 0.55% higher at 39,678.02, after

falling as much as 0.2% earlier in the session.

"Investors weighed U.S. price data due later in the day and

the national election outcome earlier in the session," said

Seiichi Suzuki, chief equity market analyst at Tokai Tokyo

Intelligence Laboratory.

"But the news on Nvidia ( NVDA ) lifted Japan's chip-related stocks,

which boosted the Nikkei."

AI chip giant Nvidia ( NVDA ) said it will resume sales of

its H20 graphics processing unit (GPU) chips to China and

expects to get U.S. government licence soon.

Shares of chip-making equipment maker Tokyo Electron rose

3.49% to become the biggest source for the Nikkei's gains.

Chip-testing equipment maker Advantest ( ADTTF ) reversed

course to end 1.78% higher.

Cable makers, which are the gauge for the data centre

investments, jumped, with Furukawa Electric ( FUWAF ) climbing

6.49% to become the top percentage gainer. Fujikura ( FKURF )

gained 3.95%.

The broader Topix edged 0.09% higher to 2,825.31.

Global investors also await U.S. consumer price data for

June, due later in the day, and will monitor for any upward

pressure on prices from tariffs.

In Japan, markets are wary of a potential defeat for the

Liberal Democratic Party and its coalition partner Komeito in

the upcoming upper house election on July 20.

A defeat could empower opposition parties that have pledged

in their campaign platforms to cut or abolish the sales tax.

Air-conditioning maker Daikin Industries ( DKILF ) lost 2.6%,

becoming the biggest drag on the Nikkei.