Japan's Nikkei tumbles as US AI curbs weigh on chip shares

TOKYO, Jan 14 (Reuters) - Japan's Nikkei share average slumped on Tuesday as investors shed semiconductor-sector stocks after the U.S. government said it would further restrict artificial intelligence (AI) chip and technology exports.

The Japanese market, coming off a holiday on Monday, was also catching up to the global equities selloff after strong U.S. jobs data on Friday spurred market participants to contemplate the potential for no Federal Reserve interest rate cuts this year.

The Nikkei index .N225 ended the morning session down 1.84% at 38,469.58. It had dropped as much as 2.2% to 38,332.91, its lowest since Dec. 2, as selling accelerated after the benchmark tumbled through its 200-day moving average of 38,696.

The broader Topix .TOPX fell 1.27%.

The Nikkei is headed for a fourth straight day of declines, slumping about 4% since Jan. 7.

Japanese stocks, much like its global peers, were also weighed down by local government bond yields hitting fresh 14-year peaks, tracking the surge in U.S. yields since the jobs data. US/

Adding to the air of caution is the release of U.S. consumer inflation data on Wednesday as well as the start of the U.S. earnings season.

On the day, 184 of the Nikkei's 225 components declined, while 40 rose and one was flat.

The biggest decliner in both percentage and index points terms was chip-testing equipment maker Advantest 6857.T, an Nvidia NVDA.O supplier, which plunged 7.8%. Nvidia dropped 2% overnight.

Tech was the worst-performing Nikkei sector, sliding 2%.

Japanese earnings reports also spurred some eye-catching moves.

Yaskawa Electric 6506.T sagged 4.7%, while Ryohin Keikaku 7453.T, owner of the MUJI stores, leapt 5.9% to be the Nikkei's biggest percentage riser.

Energy shares also outperformed due to a rise in oil prices. Refiner Inpex 1605.T advanced 1.6%.

(Reporting by Kevin Buckland; Editing by Savio D'Souza)

((Kevin.Buckland@thomsonreuters.com;))