Nikkei rises to 5-month high as Middle East calm boosts tech shares

By Kevin Buckland

TOKYO, June 26 (Reuters) - Japan's Nikkei share average touched its highest in almost five months on Thursday, as a period of calm in the Middle East encouraged investors to buy back riskier assets, particularly chip and other high-tech shares.

The Nikkei .N225 climbed 1.7% to 39,584.58 at the close and reached 39,615.59 at its highest point during the session, a level last seen on January 31.

Artificial intelligence-linked stocks stood out, with startup investor SoftBank Group 9984.T climbing 5.5% and chip-testing equipment maker Advantest 6857.T advancing 5.0%.

By contrast, the broader and less tech-heavy Topix .TOPX rose 0.8%. A sub-index of growth shares .TOPXG gained 0.9%, outpacing a 0.8% increase in value shares.

Markets globally have been soothed by the ceasefire between Israel and Iran this week, which reduced the risk of disruptions to global oil supply. Japan imports virtually all of its crude, and energy-intensive manufacturing is a key national industry.

"Growth shares, particularly semiconductor-related stocks, are benefitting from the improvement in risk sentiment," said Maki Sawada, a strategist at Nomura Securities.

The AI boom narrative is still intact, she said, adding that investors are rotating into tech from defensive sectors.

Food .IFOOD.T and pharmaceuticals .IPHAM.T were among the few Topix industry groups to decline on the day, although losses were mild.

The Nikkei's worst-performing stock, however, was chipmaker Renesas 6723.T, which tumbled 12% on signs it would push back long-term targets by five years to 2035 at an investor presentation later in the day.

The best performer was industrial machinery maker Ebara 6361.T, which soared close to 10% after Tokai Tokyo Intelligence Laboratory reiterated its outperform rating on the stock.