TOKYO: Japan's Nikkei share average rose 2% on Monday to its highest close in nearly four weeks, led by AI and chip-linked stocks after Wall Street's rally on Friday, though worries over the Middle East kept a lid on broader gains.

The Nikkei climbed 2.08% to 66,970.22, its highest close since July 15. The broader Topix rose 0.63% to 4,100.61.

"Gains of chip-related stocks supported the Nikkei. Easing bets for a U.S. Federal Reserve rate hike were the driver," said Daisuke Hashizume, senior strategist at Daiwa Securities.

U.S. stocks advanced on Friday, with the S&P closing at a record high to cap off a strong week of gains for the major indexes, after data showed the U.S. economy unexpectedly shed jobs last month and dampened expectations the Federal Reserve would raise interest rates at its September meeting.

In the Middle East, uncertainty continued over the reopening of the Strait of Hormuz as Iran said a deal with Oman defining new shipping lanes was in its final stages, but the U.S. must still meet other conditions.

In Japan, chip-related Advantest and Tokyo Electron rose 6.43% and 4.13%, respectively.

Fujikura climbed 7.62%, extending a sharp rally after the fibre-optic cable maker raised its annual net profit forecast on Friday.

Ibiden, a supplier to AI bellwether Nvidia , rose 4.03%.

Recruit Holdings jumped 22.79% to a daily limit high of 16,165 after the staffing agency's revised annual forecasts beat market expectations.

Investors stayed away from active trade as Japan is in the midst of the "obon" summer holidays and towards the end of the week, the main indexes will show little direction given a dearth of market-moving cues, Daiwa's Hashizume said.

Uniqlo-brand owner Fast Retailing fell 0.74%.

Mitsui Kinzoku, a maker of materials for lithium-ion batteries, tumbled 13.55% after its revised annual net profit forecast failed to meet market expectations. - Reuters