Japan’s Nikkei Gains on Chip Shares Boost; Fed Policy in Focus (Update 1)

TOKYO (Reuters) – Japan’s Nikkei share average closed at a two-month peak on Tuesday as heavyweight chip shares tracked their Wall Street peers higher, while investors braced for the Federal Reserve’s policy decision later this week.

Sentiment was up during early Tokyo trading after the S&P 500 and Nasdaq both logged record closing highs overnight.

Japan’s chip-related shares in particular performed strongly, following gains on the Philadelphia SE Semiconductor Index to lift the overall index.

The Nikkei finished up 0.25% at 39,134.79, its highest closing level since April 15. The index eased from a three-week intraday high of 39,336.66 touched in early trade as caution took hold.

The broader Topix fell 0.2% to 2,776.80.

Investors were positioning carefully ahead of the U.S. CPI report for May, due Wednesday,…