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

fell on Thursday as investors sold stocks to book profits from a

recent rally, with chip-related shares dragging on the index the

most.

The Nikkei had fallen 0.76% to 39,678.93 by the

midday break, while the broader Topix was down 0.77% to

2,748.70.

"The Nikkei has risen to a level that prompted investors to

sell stocks to secure profits," said Masahiro Ichikawa, chief

market strategist at Sumitomo Mitsui DS Asset Management.

"Investors need new market moving-cues to believe that the

Nikkei will rise further, and that would be the domestic

corporate outlook," he said.

Japan's Nikkei share average crossed 40,000 to hit a

five-month high of 40,398.23 on Dec. 27, but has failed to

breach that level since then.

Chip-related shares led the declines on Thursday, with Tokyo

Electron ( TOELF ) and Advantest ( ADTTF ) falling 1.54% and

0.86%, respectively.

Technology start-up investor SoftBank Group slipped

0.64% and Uniqlo-brand owner Fast Retailing ( FRCOF ) declined

0.25%.

"With the U.S. markets being closed later in the day,

investors were cautious and the index was hovering near the

bottom end of the recent trading range," said Takehiko Masuzawa,

trading head at Phillip Securities Japan.

The U.S. stock markets will be closed on Thursday for a

national day of mourning to mark the death of former President

Jimmy Carter.

All but four of the Tokyo Stock Exchange's 33 industry

sub-indexes fell, with the shipping sector losing

4.87% to become the worst performer.

Kawasaki Kisen fell 6% and Nippon Yusen

lost 4.82%, becoming the worst performers on the Nikkei.

Drug maker Chugai Pharmaceutical ( CHGCF ) rose 3.35% to

become the top performer on the Nikkei.

Of more than 1,600 stocks trading on the TSE's prime market,

26% rose and 70% fell, with 3% trading flat.