(Updates with closing prices)

By Junko Fujita

TOKYO, Aug 10 (Reuters) - Japan's Nikkei share average rose

2% on Monday to its highest close in nearly four weeks, led by

AI and chip-linked stocks after Wall Street's rally on Friday,

though worries over the Middle East kept a lid on broader gains.

The Nikkei climbed 2.08% to 66,970.22, its highest

close since July 15. The broader Topix rose 0.63% to

4,100.61.

"Gains of chip-related stocks supported the Nikkei. Easing

bets for a U.S. Federal Reserve rate hike were the driver," said

Daisuke Hashizume, senior strategist at Daiwa Securities.

U.S. stocks advanced on Friday, with the S&P closing at a

record high to cap off a strong week of gains for the major

indexes, after data showed the U.S. economy unexpectedly shed

jobs last month and dampened expectations the Federal Reserve

would raise interest rates at its September meeting.

In the Middle East, uncertainty continued over the reopening

of the Strait of Hormuz as Iran said a deal with Oman defining

new shipping lanes was in its final stages, but the U.S. must

still meet other conditions.

In Japan, chip-related Advantest ( ADTTF ) and Tokyo Electron ( TOELF )

rose 6.43% and 4.13%, respectively.

Fujikura ( FKURF ) climbed 7.62%, extending a sharp rally

after the fibre-optic cable maker raised its annual net profit

forecast on Friday.

Ibiden ( IBIDF ), a supplier to AI bellwether Nvidia ( NVDA )

, rose 4.03%.

Recruit Holdings ( RCRRF ) jumped 22.79% to a daily limit

high of 16,165 after the staffing agency's revised annual

forecasts beat market expectations.

Investors stayed away from active trade as Japan is in the

midst of the "obon" summer holidays and towards the end of the

week, the main indexes will show little direction given a dearth

of market-moving cues, Daiwa's Hashizume said.

Uniqlo-brand owner Fast Retailing ( FRCOF ) fell 0.74%.

Mitsui Kinzoku ( XZJCF ), a maker of materials for

lithium-ion batteries, tumbled 13.55% after its revised annual

net profit forecast failed to meet market expectations.

(Reporting by Junko Fujita; Editing by Harikrishnan Nair and

Subhranshu Sahu)