Japan's Nikkei rises on trade talk optimism, set to post longest rally since 2023

TOKYO, May 2 (Reuters) - Japan's Nikkei share average rose on Friday on optimism around progress on tariff talks and a weaker yen, setting the index on track to post its longest rally in nearly two years.

The Nikkei .N225 advanced 0.69% to 36,705.53 by the midday break, and is poised to post a seventh straight session of gains, its longest winning streak since August 2023.

For the week, the index is on course to rise 2% to post a third straight weekly gain.

The broader Topix .TOPX edged up 0.16% at 2,683.61.

"It looks like the tariff negotiations between Japan and the U.S. are progressing, which is within expectations but has become a positive cue," said Shoichi Arisawa, general manager of the investment research department at IwaiCosmo Securities.

"In addition, the news about the negotiations between China and the U.S. lifted U.S. stock futures, which boosted the Nikkei."

Japan's top economic negotiator Ryosei Akazawa held talks with his U.S. counterpart and said he aims to hold the third round of discussions again this month.

Separately, China's Commerce Ministry said the U.S. has approached China to seek talks over Trump's 145% tariffs and Beijing's door is open for discussions.

The Nikkei extended gains after the remarks from China, tracking a rise in S&P EScv1 and Nasdaq NQc1 futures.

The Nikkei has fully recouped its losses since U.S. President Donald Trump's April 2 tariff announcements, but gains were limited on Friday ahead of Japan's four-day weekend and U.S. nonfarm payrolls later in the day, said Arisawa.

A weaker yen also lifted appetite for Japanese stocks. The local currency sank after the Bank of Japan lowered growth forecasts due to U.S. tariffs and left interest rates on hold on Thursday.

Uniqlo-brand owner Fast Retailing 9983.T rose 1.44% to provide the biggest boost to the Nikkei.

Yamato Holdings 9064.T rose 3.69% after the package delivery services provider's strong annual operating profit outlook.