(Updates with closing levels)

By Brigid Riley

TOKYO, June 11 (Reuters) - Japan's Nikkei share average

closed at a two-month peak on Tuesday as heavyweight chip shares

tracked their Wall Street peers higher, while investors braced

for the Federal Reserve's policy decision later this week.

Sentiment was up during early Tokyo trading after the S&P

500 and Nasdaq both logged record closing highs overnight.

Japan's chip-related shares in particular performed

strongly, following gains on the Philadelphia SE Semiconductor

Index to lift the overall index.

The Nikkei finished up 0.25% at 39,134.79, its

highest closing level since April 15. The index eased from a

three-week intraday high of 39,336.66 touched in early trade as

caution took hold.

The broader Topix fell 0.2% to 2,776.80.

Investors were positioning carefully ahead of the U.S. CPI

report for May, due Wednesday, along with the conclusion of the

Fed's two-day policy meeting.

The U.S. central bank is widely expected to hold interest

rates but will release updated economic and policy projections,

putting the focus on clues of how soon policymakers expect to

begin policy easing.

But markets continue to take comfort that the Fed's next

move will be a cut and not another hike, said Charu Chanana,

global market strategist and head of FX strategy at Saxo.

"That is helping U.S. and Japanese stocks, along with

sustained AI momentum."

Among individual stocks, chip-related shares Tokyo

Electron ( TOELF ) and Advantest ( ADTTF ) climbed 2.2% and 1.6%,

respectively.

Daiwa Securities Group ( DSECF ) slipped 4.6% to become

the biggest percentage loser. The firm announced the purchase of

additional Aozora Bank ( AOZOF ) shares on Tuesday. Aozora Bank ( AOZOF )

gained 1.1%.

Shares of pharmaceutical firm Eisai ( ESALF ) declined 3.3%,

after a vote by outside advisers to the U.S. Food and Drug

Administration on Monday cleared the way for a final decision on

Eli Lilly's ( LLY ) experimental Alzheimer's treatment. Eisai ( ESALF )

has developed its own treatment, Leqembi, with Biogen.