TOKYO, Dec 27 (Reuters) - Japan's Nikkei share average

rose to a two-week high on Friday as a weak yen lifted

exporters, with Toyota Motor ( TM ) gaining for a third straight

session.

The Nikkei had risen 1.28% to 40,074.56, crossing

the 40,000 level for the first time since Dec. 12.

The broader Topix was up 1% at 2,794.54.

"First of all, there were few sellers as most investors who

wanted to sell stocks have already completed the sell-off. And

Japanese stocks seem cheap relative to U.S. stocks, so some

adjusted their positions," said Jun Morita, general manager of

the research department at Chibagin Asset Management.

"And the gains of Toyota ( TM ) and Sony ( SONY ) have lifted overall

sentiment. Toyota ( TM ) is still undervalued and that boosted appetite

for the shares."

Toyota Motor ( TM ) advanced 2.1%, becoming the biggest

source for the Topix's gain. The shares are set to rise for a

third session after local media reported this week the automaker

would double its return on equity target to 20% by around 2030.

The auto sector rose 1.54% to become the

second-best performer among the 33 industry sub-indexes on the

Tokyo Stock Exchange (TSE).

Airlines rose 1.56%.

Among individual stocks, Sony Group ( SONY ) rose 1.73%.

Uniqlo-brand owner Fast Retailing ( FRCOF ) rose 1.8%, giving

the biggest boost to the Nikkei. Chip-making equipment maker

Tokyo Electron ( TOELF ) rose 1.28%.

Seiichi Suzuki, chief equity market analyst at Tokai Tokyo

Intelligence Laboratory, said the momentum was strong as retail

investors' sales were done by Thursday, the last day for the

delivery of stocks for 2024.

Among other stocks, Makino Milling Machine ( MKMLF ) was

untraded but is set to rise to a daily limit after manufacturing

giant Nidec ( NNDNF ) said it planned to launch a tender offer to

take Makino private.

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

76% rose and 20% fell, with 2% flat.