(Updates with closing levels)

By Brigid Riley

TOKYO, April 2 (Reuters) - Japan's Nikkei share average

closed higher on Tuesday, briefly scaling 40,000 points before

profit-taking and the risk of currency intervention by Japanese

authorities hemmed in gains.

The Nikkei finished the day up 0.1% at 39,838.91.

The index is up about 19% this year and scaled the 40,000

mark to record highs last month, although profit booking pushed

it to a two-week low on Monday.

Traders took advantage of the drop to buy stocks, with many

companies getting a boost before profit-taking set in again to

limit gains.

Uniqlo parent firm Fast Retailing ( FRCOF ) eked out a 0.1%

gain, while Toyota Motor ( TM ) erased earlier gains to finish

0.2% down.

Chip-making equipment giant Tokyo Electron ( TOELF ),

meanwhile, held onto gains, rising 3.4%.

Technology-related stocks received a tailwind from their

U.S. peers as the AI frenzy continued to boost the U.S.

semiconductors index.

Chip-testing equipment maker Lasertec ( LSRCF ) gained 1.9%,

while Sumco Corp ( SUMCF ), which produces silicon used for

semiconductor manufacturers, was the best performer, rising

4.4%.

Along with profit-taking, the index's gains were also capped

as the risk of currency intervention lingered, with the yen

continuing to trade around 151.72 per dollar.

That's created a "heightened sense of caution" in the

market, said Masahiro Ichikawa, chief market strategist at

Sumitomo Mitsui DS Asset Management.

"If the yen were to appreciate rapidly due to intervention,

there is a strong possibility that the Nikkei could fall."

Japanese Finance Minister Shunichi Suzuki said on

Tuesday that authorities were ready to take appropriate action

against excessive currency market volatility, without ruling out

any options.

The intervention risk could make it difficult for the index

to keep in the 40,000-point range for now, although it could get

another boost when corporate earnings season gets into swing

later this month, Ichikawa said.

The broader Topix closed down 0.25% at 2714.45.