TOKYO, Jan 27 (Reuters) - Japan's Nikkei share average

fell on Monday as a slump in technology shares following last

week's rally beat market relief over an unsurprising Bank of

Japan (BOJ) decision last week.

The Nikkei declined 0.6% to 39,699.76 as of the

midday break, while the broader Topix was up 0.5% at

2,764.66.

The stock market received some support after the BOJ's

monetary policy concluded on Friday without a fuss, with the

central bank raising interest rates as widely expected. Markets

are still only expecting another 25 basis points of tightening

this year.

The financial sector outperformed, with banks

leading Tokyo Stock Exchange's 33 industry sectors.

Exporter shares including automaker giant Toyota Motor ( TM )

and peer Honda Motor ( HMC ) also gained, as the yen

hovered around 155.61 per dollar after briefly strengthening to

the 154 range on Friday.

Of the Nikkei's 225 constituents, 180 were up.

But Japan's heavyweight technology shares saw sizeable

losses, backtracking from gains made last week on news of U.S.

investment plans to fund infrastructure for artificial

intelligence.

Advantest ( ADTTF ), which counts U.S. chip darling Nvidia ( NVDA )

among its customers, declined 8.2% to become the

biggest drag on the Nikkei.

Some market players are watching DeepSeek after the Chinese

AI startup rolled out an open-source reasoning model called

DeepSeek-R1 that it said rivalled OpenAI's o1 on several

performance benchmarks.

"There's a view that DeepSeek's (open-source AI model) might

become the world's best," said Nomura Securities strategist Maki

Sawada.

"This could also be affecting the market, but we're likely

seeing a reversal from last week's rally," she added.

Wall Street's main indexes closed lower on Friday to dampen

investor sentiment in Asia. The technology sector

weighed on the market as megacap stocks reversed their sharp

rally earlier in the week.

Among big-names shares, AI-focused startup investor SoftBank

Group was down 6.3% and chip-making equipment giant

Tokyo Electron ( TOELF ) stumbled 4.5%. Uniqlo parent Fast

Retailing ( FRCOF ) added 0.8%.