Japan's Nikkei suffers worst week since April as AI shares sell off

By Kevin Buckland

TOKYO, Nov 7 (Reuters) - Japan's Nikkei share average sank on Friday, sending the index to its biggest weekly drop since early April, as heavyweight tech stocks tracked an overnight decline in U.S. peers amid worries about stretched valuations.

The tech-heavy Nikkei .N225 ended the day down 1.2% at 50,276.37, taking its loss for the week to 4.1%.

That's after rising to an all-time peak of 52,636.87 on Tuesday, the start of a holiday-shortened week in Japan.

In October, the benchmark index rallied 16.6% to book its best month in 35 years.

Overnight, investors returned to selling the darlings of the artificial intelligence-fuelled rally that carried Wall Street, Tokyo and other global bourses to successive record peaks in recent months. Nvidia slid 3.7% and AMD AMD.O dropped 7.3%.

In Japan, startup investor SoftBank Group 9984.T dropped 6.7% and chip-testing equipment maker Advantest 6857.T, a Nvidia NVDA.O supplier, slumped 5.5%, making them the Nikkei's top two decliners in index-point terms.

"Rather than a change in the way investors fundamentally view AI stocks, there is this risk-off mood around how fast these stocks have rallied," said Nomura Securities strategist Fumika Shimizu.

Corporate results are also key for the market now, with Japan's earnings season currently in full swing, she said.

The three biggest percentage decliners on the Nikkei on Friday all posted disappointing financial results. Environmental equipment supplier Kanadevia 7004.T tumbled more than 19% and confectionary maker Ajinomoto 2802.T and electronic component manufacturer Taiyo Yuden 6976.T each shed more than 16%.

The biggest percentage gainer was also driven by corporate results, with HR technology firm Recruit Holdings 6098.T jumping more than 16%.

Embattled automaker Nissan Motor 7201.T got some respite after reporting a return to operating profit. Its shares climbed 4.3%.

Among the Nikkei's 225 components, 102 rose versus 123 that fell.