(Recasts with a decline in shares on yen strength)

By Rocky Swift and Kevin Buckland

TOKYO, Sept 9 (Reuters) - Japan's Nikkei share average

ended lower on Tuesday, dragged by a stronger yen and

profit-taking after the index climbed past the key 44,000 mark

earlier in the session.

The Nikkei 225 Index surged as much as 1.24% to an

unprecedented 44,185.73 before closing 0.4% lower at 43,459.29,

snapping a three-day rally. The broader Topix finished

the day down 0.5%.

Shares started strong, continuing sharp gains from Monday,

on prospects for increased government spending following the

resignation of fiscal hawk Prime Minister Shigeru Ishiba.

"We think the government is likely to adopt a more

expansionary stance in the fiscal debates from the autumn, given

the need to secure the cooperation of one or more opposition

parties, all of which are calling for procyclical fiscal

policy," BofA Securities analysts said.

Stocks lost momentum as the yen strengthened, rising as much

as 0.5% to 146.82 against the U.S. dollar, denting

earnings prospects for exporters.

Japan's chief trade negotiator Ryosei Akazawa said in a post

on X that U.S. tariffs on Japanese autos are set to be lowered

by September 16, clearing up ambiguity over a trade deal

sketched out in July.

But Akazawa said the most-favoured-nation status for

pharmaceuticals and semiconductors have not been included in an

executive order signed by U.S. President Donald Trump.

Takeda Pharmaceutical ( TAK ), Japan's biggest drugmaker,

slid 3%.

Citizen Watch ( CHCLF ) sank 5.5%, among the biggest losers

on the Nikkei. The index compiler said after the close on Monday

that Citizen would be removed from the Nikkei 225 from October.

The Nikkei's biggest gainer was chip-testing equipment maker

and Nvidia supplier Advantest ( ADTTF ), which jumped 6.5% to a

new record high.

Other notable risers included chip-making tool manufacturers

Screen Holdings ( DINRF ), which jumped 2.4%, and Tokyo Electron ( TOELF )

, which added 2%.