TOKYO, June 22 (Reuters) - Japan's Nikkei share gauge surged

past the 72,000 mark for the first time on Monday as euphoria

over AI investment outweighed uncertainty over U.S.-Iran peace

talks.

The benchmark Nikkei 225 advanced 1.4% to 72,247.21

in early trading after touching a record intraday high of

72,269.64. The broader Topix gained 1.1% to 4,089.59.

The government of Japanese Prime Minister Sanae Takaichi

plans to set a target of about 370 trillion yen ($2.29 trillion)

in public and private investment in strategic sectors including

AI and chips by 2040, the Nikkei reported on Friday.

Shares extended gains after Qatar and Pakistan, mediators to

peace talks between the U.S. and Iran, said progress had been

made and negotiations would continue following a tense opening.

"AI-related companies are once again playing a leading role

in driving the market," said Wataru Akiyama, an equities

strategist at Nomura Securities. "A high level of vigilance

regarding developments in the situation in Iran and the Middle

East is likely to persist."

Nonferrous metals led Topix sector gains, up 7.57%, followed

by electric appliances and glass & ceramics products, which rose

2.08% and 2.05%, respectively. Real estate shares were among the

laggards, down 1.07%.

There were 146 advancers in the Nikkei 225 against 75

decliners and three unchanged.

J.Front Retailing led gainers with a 16.24% surge

after activist investor 3D Investment Partners said it took a

5.10% stake in the department store operator.

It was followed by Yaskawa Electric ( YASKF ), trading up

9.02%, and robot maker Fanuc ( FANUF ), which gained 8.10%.

The largest losers were Taiyo Yuden ( TYOYF ), down 3.37%,

followed by Tokyo Electric Power ( TKECF ), 3.05% lower, and

Obayashi ( OBYCF ), which lost 2.99%.