Tech shares drive Japan's Nikkei to record high before BOJ decision, JGB yields rise

By Kevin Buckland

TOKYO, Oct 30 (Reuters) - Japan's Nikkei share average rose to a record high on Thursday, driven by a rally in chip-sector shares, as investors awaited the Bank of Japan's latest policy decision.

Japanese government bond (JGB) yields climbed, mirroring moves in U.S. Treasuries overnight. The yen JPY= strengthened slightly to 152.56 per U.S. dollar, stabilising after a 0.3% drop in the previous session.

The tech-heavy Nikkei .N225 climbed as much as 0.4% to reach 51,513.66 for the first time, before retreating to trade 0.2% down on the day at 51,198.62.

Chip-testing equipment maker Lasertec 6920.T was the Nikkei's biggest percentage gainer, soaring 21%. Larger peer Advantest 6857.T rose 2.4%, which was enough to make it the top gainer in index point terms.

The broader Topix .TOPX gained 0.3% to 3,288.58.

Overnight, Wall Street's Nasdaq .IXIC rallied to an all-time peak, and chipmaker Nvidia NVDA.O became the world's first $5 trillion company.

"The AI data centre- and chip-related shares that have been instrumental in driving overall gains for Japanese stocks so far are lifting the Nikkei again today," said Nomura Securities strategist Chisa Matsuda.

At the same time, "the fact that the Nikkei crossed the major psychological threshold of 51,000 is significant, and could potentially act as a weight on stocks from here," she said.

Later in the day, the BOJ is widely seen leaving policy unchanged, with traders focused on any signs that an interest rate hike might be coming at the next meeting in December or the following one in January.

The policy announcement doesn't have a set time, but generally comes between 0330 GMT and 0500 GMT.

The two-year JGB yield JP2YTN=JBTC rose as much as 1 basis point (bp) to 0.95%, matching the level reached on October 1, which was the highest since June 2008.

The five-year yield JP5YTN=JBTC added 1.5 bps to 1.24%, hitting that level for the third time this month. The yield had previously not been this high since July 2008.

The 10-year yield JP10YTN=JBTC advanced 2.5 bps to 1.675%.