(Updates with closing levels)

By Kevin Buckland

TOKYO, May 29 (Reuters) - Japan's Nikkei share average

rose to a record high on Friday, powered by renewed optimism for

a near-term peace deal in the Middle East and enthusiasm about

AI shares after strong earnings from Dell Technologies ( DELL ).

The Nikkei notched a lifetime-high close by climbing

2.5% to 66,329.50, and also marked an all-time intraday peak at

66,505.02.

The broader Topix advanced 1.4% to 3,957.17, also a

record close, and set a new intraday high at 3,984.58.

Sources told Reuters that the U.S. and Iran have reached an

agreement to extend their ceasefire and lift restrictions on

shipping, though U.S. President Donald Trump has yet to approve

it, and Iranian state media said it had not been finalised.

Conflicting headlines in recent days around progress in

negotiations between Washington and Tehran have seen stocks

swing, but for the week, the Nikkei and Topix gained 4.7% and

1.7%, respectively.

The Nikkei outperformed largely due to a high concentration

of tech stocks, and heavy weighting for some darlings of the AI

trade, such as startup investor SoftBank Group, which gained

5.1% on Friday to bring its advance for the week to 10.9%.

On Thursday, Dell raised its annual revenue and

profit forecasts, showing data centre expansion by clients is

fuelling demand for its AI-optimised servers.

"Dell Technologies ( DELL ) commented that there is no sign of a

slowdown in AI demand," driving a sharp rise in Japanese AI

stocks such as SoftBank, said Wataru Akiyama, a strategist at

Nomura Securities.

Meanwhile, "announcements from both the U.S. and Iran

suggesting progress toward a provisional agreement have provided

a sense of reassurance to the market," buoying stocks more

broadly, he said.

Of the Nikkei's 225 components, 163 rose versus 61 that

fell, with one ending flat.

Silicon maker Sumco ( SUMCF ) soared more than 19%, making it

the index's biggest percentage gainer.

However, not all AI shares got a lift from Dell,

with data centre cable makers Fujikura ( FKURF ) and Furukawa

Electric ( FUWAF ) dropping 4.9% and 4.1%, respectively, to be

among the Nikkei's worst performers.

(Reporting by Kevin Buckland; Editing by Rashmi Aich and

Subhranshu Sahu)