(Updates as of 0600 GMT)

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

ended higher on Friday, tracking the Dow's overnight gains, but

pared a large chunk of its early gains as investors booked

profits.

The Nikkei added 0.18% to close at 38,981.75, after

rising as much as 0.7% earlier in the session. The index ended

the week 1.75% lower.

The broader Topix ended 0.04% higher at 2,688.98,

but posted a 0.68% weekly loss.

The Dow Jones Industrial Average on Thursday advanced to its

fourth record close in the last five sessions, as

stronger-than-expected monthly retail sales indicated a robust

U.S. consumer and TSMC's upbeat forecast buoyed chipmakers'

stocks.

"As the Nikkei got closer to the 40,000 level, investors

sold stocks to book profits," said Fumio Matsumoto, chief

strategist at Okasan Securities.

"That was because the market did not justify its recovery to

the 40,000 level on Tuesday. The index rose too fast."

Uniqlo-owner Fast Retailing ( FRCOF ) rose 1.06% to become

the biggest support to the Nikkei. Chipmaking device supplier

Disco jumped 7.67%.

Technology investor SoftBank Group lost 0.65% to

weigh the most on the Nikkei.

Chip-related stocks Advantest ( ADTTF ) and Tokyo Electron ( TOELF )

fell 0.42% and 0.13%, respectively.

"Despite the yen's weakness and the strength of U.S.

equities, gains of domestic shares are limited. That is partly

due to uncertainties about Japanese politics," said Shoichi

Arisawa, general manager of the investment research department

at IwaiCosmo Securities.

Japan's ruling party may lose its majority in the lower

house, according to media polling ahead of the Oct. 27 election,

meaning it would likely have to rely on coalition partner

Komeito to stay in power.

The U.S. dollar headed for its third weekly rise in a row,

after touching 150 yen against the Japanese currency for the

first time since Aug. 1.

A softer yen tends to help exporter shares as it increases

the value of overseas profits in yen terms when firms repatriate

them to Japan.