(Updates with closing prices)

By Kevin Buckland

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

rose on Tuesday, buoyed by a weakening yen and as U.S. President

Donald Trump gave an additional three-week grace period for

tariff negotiations.

The Nikkei gained 0.26% to end at 39,688.81. The

broader Topix added 0.17%.

On Monday, Trump began telling selected trade partners that

they will see higher tariff rates from August 1, with the

original three-month moratorium on "Liberation Day" reciprocal

levies expiring on Wednesday. Japan will now see a rate of 25%.

Prime Minister Shigeru Ishiba said his administration would

continue negotiations with the White House to seek a mutually

beneficial bilateral deal. Initially touted by Trump's team as a

likely early success, talks with Tokyo remain stalled for weeks,

largely over a 25% tariff on Japanese auto imports.

"It's very clear that it will be very difficult" to overcome

the obstacles to an agreement on autos, said the chief macro

strategist at Sumitomo Mitsui DS Asset Management, Masayuki

Kichikawa, who sees the 25% duty on the sector sticking.

Japan's best outcome would be a lowering of the universal

25% rate to the baseline 10% the U.S. is levying on all trading

partners, he said.

According to Kichikawa, "there is no choice other than to

wait and see" for now as the July 20 Japanese upper house

elections leave Ishiba's team little room to show flexibility in

trade negotiations until after the result.

Japanese stocks rose on the day even after the tariff

announcements, which also included South Korea along with a host

of smaller nations, sent Wall Street sliding from record highs.

Japan's heavyweight exporters were supported by a sharply

weaker yen, with Trump's new tariff rates spurring a broad rally

in the U.S. currency overnight. A weaker yen inflates the value

of overseas revenues.

The chip sector was a standout, with Advantest ( ADTTF )

gaining 2.5% and Furukawa Electric ( FUWAF ) jumping 6.5%.

Most automakers advanced, with Honda rising 0.8%

and Toyota ( TM ) up 0.5%.

However, shares of embattled Nissan ( NSANF ) slumped for a

third day, shedding an additional 6.4% to be the Nikkei's

biggest decliner in percentage terms.