TOKYO, July 18 (Reuters) - Japan's Nikkei share average

slipped from a more than two-week high to trade lower on Friday

as investors weighed the outcome of the nation's upper house

election due on the weekend.

The Nikkei slipped 0.31% to 39,778.85 by the midday

break. Earlier, it had risen to as much as 40,087.59, its

highest level since July 1, underpinned by the strong

performance of Wall Street, but fell soon as investors started

selling to book profits.

The S&P 500 stock index and the Nasdaq Composite

both finished at record highs on Thursday, as investors

embraced strong economic data and earnings reports that showed

American consumers remained willing to spend.

For the week, the Nikkei is set to rise 0.5% and snap a two

straight weeks of losses.

The broader Topix was down 0.13% to 2,836.1.

"Investors did not want to take a risk in buying stocks

ahead of the national election on the weekend," said Yugo

Tsuboi, chief strategist at Daiwa Securities.

"But the momentum is not bad as about half the stocks rose."

Prime Minister Shigeru Ishiba's Liberal Democratic Party

(LDP) and its partner Komeito are expected to lose their

majority in the upper house on Sunday.

Strategists now focus on whether Ishiba will remain in his

position or step down after the election, as a gauge of the

nation's potential policy shift, which could lead to a cut in

the national consumption tax.

Chip-related heavyweight fell, with Advantest ( ADTTF ) and

Tokyo Electron ( TOELF ) losing 4.27% and 0.7%, respectively.

Disco tanked 10.26% to become the biggest

percentage loser on the Nikkei, as the chipmaking device

supplier's quarterly operating profit forecast missed market

expectations.

Uniqlo-brand owner Fast Retailing ( FRCOF ) rose 0.79% to

provide the biggest support to the Nikkei. Technology investor

SoftBank Group rose 1.5%.

Of more than 1,600 stocks on the Tokyo Stock Exchange's

prime section, 42% rose and 53% fell, and 4% traded flat.