Nikkei edges higher as chip-related shares gain

TOKYO, Jan 31 (Reuters) - Japan's Nikkei share average rose marginally on Friday as chip-related stocks tracked Wall Street higher, while a stronger yen weighed on market sentiment and U.S. tariff worries lingered.

The Nikkei .N225 had risen 0.07% to 39,540.37 by the midday break, but was set to lose 1% for the week in what would be its fourth weekly fall in five.

The broader Topix .TOPX was 0.04% lower at 2,780.86.

Chip-making equipment maker Tokyo Electron 8035.T rose 3.27% to provide the biggest boost to the Nikkei. Fujikura 5803.T, which makes fibres used by data centres, jumped 4%.

"Gains in Japanese equities were limited as the yen strengthened and the market was also concerned about U.S. President Donald Trump's tariff policy and its impact on Japanese firms," said Kentaro Hayashi, a senior strategist at Daiwa Securities.

Trump has said Feb. 1 would be the date that he imposes 25% tariffs on imports from Canada and Mexico.

The yen was on track for its best monthly start to the year since 2018, helped by the view that the Bank of Japan is likely to keep raising rates this year while its global peers elsewhere look to ease policy. FRX/

A stronger Japanese currency tends to hurt shares of exporters, as it decreases the value of overseas profits in yen terms when firms repatriate them to Japan.

"Although the market was not totally pessimistic. Investors became selective and bought stocks with a positive outlook and returns," Hayashi said.

NEC 6701.T surged 17% after the computer maker raised its annual operating profit forecast and announced a 5-for-1 stock split. Conglomerate Hitachi 6305.T rose 4% ahead of its earnings later in the day.

Among losers, scandal-hit Fuji Media 4676.T fell 5% after the television network operator slashed its annual net profit forecast by two-thirds citing a sharp drop in advertising revenue.

Truck maker Hino Motors 7205.T tumbled 10% to become the worst percentage loser on the Nikkei.