(Updates with closing prices)

TOKYO, May 9 (Reuters) - Japan's Nikkei share average

closed at a more than one-month high on Friday, as risk appetite

was lifted after a U.S. trade agreement with Britain raised

optimism for progress in talks with other countries.

The Nikkei rose 1.56% to 37,503.33, its highest

closing level since March 27. In a holiday-shortened week, the

index rose 1.83% and posted a fourth straight week of gains.

The broader Topix rose 1.29% to 2,733.49, posting an

11-session rally - its longest since October 2017.

"Investors see that the market slump in April was the worst,

and the environment not just for equities but for bonds is only

getting better as more compromises on trade talks could be

possible," said Hiroyuki Ueno, chief strategist at Sumitomo

Mitsui Trust Asset Management.

U.S. President Donald Trump and British Prime Minister Keir

Starmer on Thursday announced a limited bilateral trade

agreement that leaves in place Trump's 10% tariffs on British

exports.

Financial markets are now awaiting the outcome of

preliminary U.S.-China trade talks due to begin on Saturday in

Switzerland.

Trump said on Thursday he expects there to be substantive

negotiations between the two countries, and predicted that

punitive U.S. tariffs on Beijing of 145% would likely come down.

"The market was also relieved that the outlook of Japanese

firms, including Toyota, is not severely affected by the U.S.

tariffs," said Ueno.

Investors were once pessimistic about the corporate outlook

amid uncertainties about the impact of U.S. tariffs.

Among individual stocks, NTT Data ( NTTDF ) surged 14.26%

after NTT said it would take the subsidiary private by

purchasing the shares it does not already own at 4,000 yen per

share.

Ajinomoto ( AJINF ) rose 7.4% after the food and healthcare

company announced a 100-billion-yen ($686.2 million) share

buyback.

On the other hand, Mitsubishi Heavy Industries ( MHVYF ) fell

5.57% to become the worst percentage loser on the Nikkei.

($1 = 145.7300 yen)

(Reporting by Junko Fujita; Editing by Varun H K)