(Updates with closing prices)

By Kevin Buckland

TOKYO, July 17 (Reuters) - Japan's Nikkei share average

recovered from early losses to end Thursday with solid gains as

a weakening yen bolstered sentiment, while chip shares pared

declines after Taiwanese chipmaker TSMC posted record earnings.

The Japanese currency sank as much as 0.5% against the U.S.

dollar, sliding towards Wednesday's 3-1/2-month nadir. A weak

currency boosts the value of overseas revenues for heavyweight

exporters.

Meanwhile, TSMC reported results that topped analyst

forecasts during the Tokyo Stock Exchange's afternoon session.

It undid some of the pessimism from Dutch chip-making tool

supplier ASML's revenue warning, which had weighed on

Japanese chip shares in the morning.

The tech-heavy Nikkei ended the day up 0.6% at

39,901.19, reversing earlier declines of as much as 0.7%.

The broader Topix rose 0.7%.

Silicon producer Sumco ( SUMCF ) was the Nikkei's biggest

percentage gainer with a 7% jump. AI-focused start-up investor

SoftBank Group was the biggest support in index-point

terms with a 2.3% increase.

Heavily weighted chip-testing machinery maker Advantest ( ADTTF )

was the Nikkei's biggest drag after dropping 0.8%.

Chip-making equipment manufacturer Lasertec ( LSRCF ) was another

standout loser, with a 4.8% tumble.

ASML warned on Wednesday that it may not achieve revenue

growth in 2026 as chipmakers building factories in the U.S.

await clarity on the potential impact of tariffs.

For Japanese peers, "quarterly orders are likely to

fluctuate but, based on the 12-month moving average, orders have

not yet entered a recovery phase, similar to ASML," Jefferies

analysts wrote in a research note on Wednesday.

Orders for extreme ultraviolet lithography equipment, a key

component in chipmaking, have been "stalled" since increasing

"sharply" in the first half of last year, although a recovery is

likely in 2026, they said.

The Nikkei's biggest decliner in percentage terms was Seven

& i Holdings ( SVNDF ), which slumped 9.2% after Canada's

Alimentation Couche-Tard ( ANCTF ) ended its takeover bid for the

operator of the 7-Eleven convenience store chain.

The worst performer among the 33 Topix industry groupings

was the mining sub-index, which includes oil

explorers, which sank 1.0% with Brent oil languishing below $70

a barrel this week. The oil and coal sub-index lost

0.8%.