TOKYO, March 8 (Reuters) - Japan's Nikkei share average

rose on Friday, as technology stocks rallied tracking gains in

Wall Street peers overnight and banks advanced on expectations

that the country's central bank could exit negative interest

rates as soon as this month.

The Nikkei 0.9% to 39,935.24 by the midday break.

Chip-making equipment giant Tokyo Electron ( TOELF ) was up

3%, adding roughly 114 points to the Nikkei's 336.53-point gain.

Chip-testing equipment maker Advantest ( ADTTF ) gained 3%,

and artificial intelligence-focused startup investor SoftBank

Group was up 2.5%.

The banking industry sub-index jumped 2.24% on

speculation that the Bank of Japan (BOJ) could normalise policy

at its meeting on March 18-19, after fresh comments from central

bank officials on Thursday. The sub-index was set for weekly

gains of 6.2%, its best performance since September.

Still, the Nikkei has lost some momentum this week after

crossing the 40,000 level for the first time ever on Monday, as

profit-taking set in and a strengthened yen weighed on exporter

shares.

Auto firms slid on a strong yen, including Toyota Motor ( TM )

, down 0.5%, and Suzuki Motor ( SZKMF ), falling 2.2%.

Traders were making some corrections in exporter stocks as

they prepared for the BOJ's meeting, said Naka Matsuzawa, chief

macro strategist at Nomura.

"Investors don't know how much of a rebound (in yen) will

come after the policy change, so they don't get side-lined."

A weaker yen makes Japanese exports more competitive and

boosts the value of overseas revenue.

The Japanese currency saw its biggest jump versus the dollar

this year on Thursday.

The Nikkei remained close to snapping a string of five

consecutive weekly gains, as it shattered the 1989 record high

last month. It was down 0.7% for the week.

The broader Topix was up 0.6% at 2734.62 by the

midday break.