TOKYO, May 7 (Reuters) - Japan's Nikkei share average

shot to a record high on Thursday and the nation's bonds rallied

as financial markets reopened after holidays, catching up with

optimism over strong technology earnings and signs of a

potential peace deal in the Middle East.

The benchmark Nikkei 225 Index rose 4.19% to

62,009.59, breaking through the 62,000 mark for the first time.

The broader Topix climbed 2.12% to 3,807.84.

Japanese government bonds (JGBs) rose after a three-day

trading break that saw the yen appreciate on suspected

intervention by authorities in Tokyo.

The yen bought 156.33 per dollar, largely steady a

day after a sprint to a 10-week high of 155 fuelled talk of

further official support.

Wall Street indexes hit record highs overnight as positive

results from Advanced Micro Devices ( AMD ) propelled euphoria

over the red-hot artificial intelligence sector. Iran said it is

reviewing a U.S. proposal to end the more than two-month war,

while President Donald Trump said the U.S. has had very good

talks with Tehran.

"Today's sharp gain of the Nikkei was led by the strong

performance of chip shares, driven by Advanced Micro Devices's ( AMD )

strong forecast," said Takamasa Ikeda, a senior portfolio

manager at GCI Asset Management. "The contents of the U.S.-Iran

peace proposals are thin, but there is an expectation in the

market that further military action will not take place."

There were 144 advancers on the Nikkei index against 78

decliners. The largest percentage gainers in the index were tech

sector suppliers, led by Ibiden ( IBIDF ), up 15.9%, followed by

Mitsui Kinzoku Ltd, gaining 15.3%, and Renesas

Electronics ( RNECF ), 12.8% higher.

Mining and exporter shares were broadly lower, however,

marking a reversal from gains during the Iran conflict as energy

prices surged and the yen weakened. Inpex ( IPXHF ), Japan's top

oil and gas explorer, sank 5.9%, while Honda Motor ( HMC ) lost

0.7%.

"The automakers remain weak as the environment has become

severe with intensifying global competition," said Hiroyuki

Ueno, chief strategist at ‌Sumitomo Mitsui Trust Asset

Management. "Besides that, they may not enjoy benefits of the

weak yen in the current fiscal year."

Minutes released on Thursday of the Bank of Japan's March

showed many board members saw the need to raise interest rates

if the Iran war-driven energy shock is prolonged.

The benchmark 10-year JGB yield

fell 1.5 basis points (bps) to 2.485%. Yields

move inversely to bond prices. The five-year yield

fell 0.5 bps to 1.870%.