(Updates with closing levels)

By Brigid Riley

TOKYO, May 20 (Reuters) - Japan's Nikkei share average

rose on Monday, hitting 39,000 points for the first time in a

month, as higher expectations for U.S. interest rate cuts

continue to keep market sentiment upbeat.

The Nikkei closed 0.73% higher at 39,069.68, jumping

over 1% during trading before profit-taking set in. It was the

first time the benchmark index reached the psychologically

significant 39,000-point range since April 15.

The broader Topix was up 0.82% at 2768.04.

A milder inflation report last week has investors once again

pricing in U.S. rate cuts as early as September, buoying global

market sentiment and in turn boosting Japanese equities.

Wall Street, which Japan's stock market tends to track, saw

stock indexes lock in weekly gains despite ending mixed on

Friday. The Dow Jones Industrial Average closed at a

record high.

Futures of U.S. stock indexes were also up during Tokyo

trading time, which may also have provided investors with a

"sense of confidence," said Masahiro Ichikawa, chief market

strategist at Sumitomo Mitsui DS Asset Management.

The Nikkei hit an all-time high of 41,087.75 earlier this

year before falling nearly 5% last month in its largest monthly

drop since December 2022. It is up about 16% this year.

On Monday, buying was widespread, with 183 of the index's

225 constituents advancing. Gains narrowed, however, as

investors sought to lock in profits.

Among individual shares, Fast Retailing ( FRCOF ) was up

0.9%, and chip-making equipment giant Tokyo Electron ( TOELF )

gained 0.7%.

Shin-Etsu Chemical ( SHECF ), which manufactures chip silicon

products among other things, jumped 4.2%.

AI-focused startup investor SoftBank Group ( SFTBF ) fell

2.8%.

Advantest ( ADTTF ), which counts U.S. artificial

intelligence firm Nvidia among its customers, edged down 0.4% as

investors awaited Nvidia's revenue results due later this week.

"If the market perceives (Nvidia's) outlook as better than

expected, ...it will react with a rally in chip-related shares,

not just in the U.S. but also in Japan," said Ichikawa.