Japan's Nikkei recoups losses as Nvidia's strong forecast lifts sentiment

By Junko Fujita

TOKYO, Aug 28 (Reuters) - Japan's Nikkei share average reversed early losses to trade higher on Thursday, as investors awaited Wall Street's response to AI chipmaker Nvidia's strong quarterly outlook even as its Tokyo-based supplier Advantest edged lower.

As of 0146 GMT, the Nikkei .N225 was up 0.4% at 42,676.30, after falling as much as 0.5% earlier in the session.

The broader Topix .TOPX rose 0.3% to 3,079.01.

"The main focus is Nvidia. The market is waiting to see how the shares will perform on Wall Street later in the day," said Takamasa Ikeda, senior portfolio manager at GCI Asset Management.

U.S.-based chipmaker Nvidia NVDA.O forecast third-quarter revenue above market estimates on Wednesday, helped by robust demand for its AI chips, but the stock fell 3% in after-hours trading as its on-hold China business remained uncertain.

Nvidia shares are a key driver of Japan's Nikkei, which is heavily weighted toward chip-related stocks. On Thursday, the index opened lower but reversed losses as chip-testing equipment maker Advantest 6857.T pared its earlier decline.

Advantest was last down 0.22%, after falling as much as 3.6% earlier in the session.

Technology investor SoftBank Group 9984.T rose 3.44%, contributing the biggest boost to the Nikkei. Shares of chip-making equipment maker Tokyo Electron 8035.T rose 0.71%.

Cable maker Fujikura 5803.T, a gauge for data centre investments, jumped 3%.

Sompo Holdings 8630.T jumped 4.49% after the Japanese insurer said it would acquire New York-listed Aspen Insurance Holdings AHL.N for about $3.5 billion.

Energy explorers .IMING.T rose 3.25% to become the top performers among the Tokyo Stock Exchange's (TSE) 33 industry sub-indexes.

Uniqlo-brand owner Fast Retailing 9983.T slipped 0.34% to become the biggest drag for the Nikkei.

Of more than 1,600 stocks trading on the TSE's prime market, 51% advanced, 42% fell, and 5% traded flat.