(Updates with closing prices)

By Kevin Buckland

TOKYO, May 1 (Reuters) - Japan's Nikkei share average

rose on Thursday, extending early gains after the Bank of Japan

slashed growth and inflation forecasts in a sign it would take

longer than previously expected to raise interest rates again.

The Nikkei ended the day up 1.1% at 36,452.30. The

BOJ's policy announcement came during the midday trading recess.

The broader Topix added 0.5%.

The BOJ cited uncertainties stemming from U.S. President

Donald Trump's aggressive and erratic trade policies in more

than halving its growth forecast for the current fiscal year to

0.5%, and projected underlying inflation to take about an

additional year to be consistent with its policy target.

The central bank kept the benchmark rate at 0.5%, as widely

expected.

"Without a significant easing of U.S. tariff policy, we

expect the BOJ will maintain the current policy rate this year

and in 2026, before raising the policy rate to 0.75% only in

2027," said Norihiro Yamaguchi, an economist at Oxford

Economics.

Later on Thursday, Japan's chief negotiator, economy

minister Ryosei Akazawa, is due to hold his second round of

talks on a tariff deal in Washington.

U.S. President Donald Trump said on Wednesday that deals

with Japan, South Korea and India might be close.

"Any progress in these negotiations, and although it will be

little by little, we should see calm return to Japanese

equities, and the Nikkei could recover to the 37,000 level,"

said Wataru Akiyama, a strategist at Nomura Securities.

Notably, shipping shares as a group were the

worst performers among the Tokyo Stock Exchange's 33 industry

groupings, dropping 1.8% amid ongoing global trade uncertainty.

The tech-heavy Nikkei outperformed as semiconductor-related

shares added to gains throughout the day.

Chip-testing equipment maker Advantest ( ADTTF ) jumped 6.9%

and was the Nikkei's biggest gainer in index-point terms, as it

tracked after-hours advances for U.S. tech megacaps Meta

Platforms ( META ) and Microsoft ( MSFT ) on strong financial

results.

(Reporting by Kevin Buckland; Editing by Rashmi Aich and

Mrigank Dhaniwala)