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

edged up on Friday, led by a rally in semiconductor-related

shares after overnight gains on Wall Street boosted trader

sentiment.

Gains were limited, however, ahead of Japan's ruling Liberal

Democratic Party leadership election to decide who will replace

Prime Minister Fumio Kishida.

The Nikkei was up 0.1% at 38,964.65 by the midday

break after briefly breaking above 39,000 points for the first

time since Sept. 2.

The broader Topix was down 0.73% at 2,701.2.

The S&P 500 scored a record closing high and the Dow and

Nasdaq rose on Thursday. Most U.S. chip stocks rallied with

shares of Micron Technology ( MU ) after the memory chip maker

projected first-quarter revenue above expectations, highlighting

strong demand for memory chips used in artificial intelligence

computing.

The positive sentiment continued into Asian trading hours,

spurring Japanese chip-related shares to climb higher.

Tokyo Electron ( TOELF ) delivered the biggest boost to the

Nikkei with a 4.2% rise, while Lasertec ( LSRCF ) climbed 5.1%.

Fanuc ( FANUF ), adding 4.4%, Yaskawa Electric ( YASKF ),

gaining 3.7%, and other shares with strong ties to China rallied

again on Friday, as Chinese stocks headed for the best week

since 2008 after Beijing rolled out a huge stimulus package to

revive the economy.

However, gains narrowed as attention turned to the Liberal

Democratic Party election.

Results from the first round of voting are expected during

market hours in the Asian afternoon, and a runoff election will

likely follow shortly afterwards.

Three candidates are seen leading a pack of politicians

vying for the top spot, including Sanae Takaichi, an advocate of

deceased former premier Shinzo Abe's "Abenomics" stimulus

policies and vocal opponent of further interest rate hikes in

Japan.

A win for Takaichi could see stocks rise for now, although

whether that can be sustained remains unclear, said Hiroshi

Namioka, chief strategist at T&D Asset Management.

"A bit of caution is needed."