(Updates with prices as of 0600 GMT)

By Brigid Riley

TOKYO, Oct 3 (Reuters) - Japan's Nikkei share average

rose 2% on Thursday, buoyed by a softer yen as Prime Minister

Shigeru Ishiba's dovish comments reduced bets of further

tightening in monetary policy.

The Nikkei closed 1.97% higher at 38,552.06, while

the broader Topix finished up 1.2% at 2,683.71.

Ishiba said Japan is not in an environment for an additional

rate increase, in an apparent effort to shake off his reputation

as a monetary hawk, after a meeting with Bank of Japan Governor

Kazuo Ueda on Wednesday.

The yen touched a six-week low against the dollar, after

rallying in the wake of Ishiba's win in the ruling Liberal

Democratic Party's leadership election on Friday.

The yen and Japanese stocks tend to move in opposite

directions, since a stronger domestic currency hurts exporters'

competitiveness when repatriating revenue.

The Nikkei's gains slowed somewhat as the index neared the

psychologically significant 39,000 level.

There's a growing focus on how the new administration's

economic policies will shape up, said Maki Sawada, an equities

strategist at Nomura Securities.

"With those factors somewhat uncertain, it could temporarily

weigh on the stock market," although a weaker yen looked poised

to support equities on Thursday, she said.

Ishiba had previously said he would beef up taxation on

investment income and that there was room for corporate tax

hikes. He has however begun to back-pedal on his focus on fiscal

discipline.

Gains were broad-based on the Nikkei, with 181 of the 225

constituents advancing. Shares of exporters gained on the back

of a softer yen. Sony Group ( SONY ) rose 1.1% and automaker

Toyota Motor ( TM ) gained 1.3%.

Big technology shares tracked their U.S. peers higher and

added to the Nikkei's rally.

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

climbed 2.7% and 4.7%, respectively, while AI-focused

startup investor SoftBank Group was up 2.4%.

Nikkei heavyweight Fast Retailing ( FRCOF ) surged 3.7%,

after the Uniqlo parent said on Wednesday that domestic store

sales rose in September.