* Central bank flags inflation risks without signalling

urgency to tighten

* Yen steady near 160-per-dollar level seen as danger zone

for intervention

* AI-related shares buoy Nikkei even as majority of

components decline

(Updates with BOJ Uchida's comments, closing stock prices)

By Kevin Buckland

TOKYO, June 16 (Reuters) - Japan's Nikkei share average rose

to a record high on Tuesday after the Bank of Japan raised

interest rates as widely expected, without signalling urgency

for further tightening in monetary policy.

Japanese government bonds slid after the decision to raise

the key rate by a quarter point to 1%, while the yen remained

largely flat at around 160 per dollar, a level that traders see

as a line in the sand for currency intervention by Japanese

officials.

The Nikkei ended the day with a 0.1% gain to close

at 69,404.50, although it earlier jumped as much as 1% to reach

70,020.68 for the first time.

The broader Topix, however, lost 0.2% on the day to

finish at 3,991.14, after initially flipping to gains following

the policy announcement, but then retracing that advance.

"Price rises are broadening, and there is a risk that

underlying inflation may deviate from our target," whereas "the

risk of a sharp deterioration in the economy has diminished,"

BOJ Deputy Governor Shinichi Uchida said at a news conference

that began at the same time the stock market closed. He said

there was no proposal for a half-point rate hike at the meeting.

The BOJ's decision to raise rates for the first time since

December came during the trading break for stocks and bonds, and

had little initial effect on the yen. Japan's currencyoscillated

in a narrow range slightly on the weaker side of 160 per dollar

, last changing hands at 160.32.

"The BOJ delivered what markets expected," said Charu

Chanana, chief investment strategist at Saxo. "But the reaction

shows this was not hawkish enough to force a major yen

repricing."

The central bank "is still moving in a very gradual way and

continues to say financial conditions will remain

accommodative," she added. "This is mildly supportive for

Japanese equities because the BOJ is tightening, but not in a

way that threatens liquidity or earnings."

Of the Nikkei's 225 components, 78 rose versus 144 that

fell, with three ending flat.

Several heavily weighted AI stocks had an outsized impact in

buoying the market. Chip-testing machinery makers outperformed,

with Advantest ( ADTTF ) gaining 3.1%, as did data centre plays,

with Fujikura ( FKURF ) and Furukawa Electric ( FUWAF ) up 9% and

4.9%, respectively.

Benchmark 10-year JGB futures lost 0.49 yen to

127.77 yen as of the end of the regular session. The yield on

the 10-year cash bond was 7 basis points (bps)

higher at 2.655%. Yields rise when bond prices fall.

Moves elsewhere on the curve were more muted, with the

two-year yield adding 1 bp to 1.405% and 30-year

yields rising 3 bps to 3.775%.

Prior to Tuesday, yields had been declining over the past

several weeks from record highs, with inflation fears receding

amid optimism for a near-term end to the Iran war.

"In a scenario where inflation accelerates or the yen

weakens further, bringing forward the timing of the next rate

hike could come into view," said Hirofumi Suzuki chief FX

strategist at SMBC.

Currently though, "the BOJ is likely to continue raising

rates at a gradual pace of around once every six months to one

year," he said.