TOKYO: Japan's Nikkei share average retreated on Friday from a record closing high, dragged down by heavyweight chip and artificial intelligence-related shares, but was on track for its biggest monthly gain in four months.

The Nikkei fell 0.8 per cent to 58,292.64 by 0146 GMT. It has risen nine per cent so far this month, heading for its biggest monthly gain since October, as Prime Minister Sanae Takaichi's landslide election win in this month's general elections has raised bets for big fiscal spending.

The broader Topix was up 0.43 per cent at 3,897.24. It has gained nine per cent this month in what could be its biggest monthly jump since November 2020.

On Friday, chip-testing equipment maker Advantest fell 4.62 per cent after Nvidia slipped 5.5 per cent overnight and dragged other US chip stocks lower. The US Philadelphia SE Semiconductor index fell 3.2 per cent.

Chip-making equipment maker Tokyo Electron lost 3.77 per cent and technology investor SoftBank Group slipped 3.4 per cent.

Fibre-optic cable makers, beneficiaries of AI data centre investments, fell sharply, with Furukawa Electric and Fujikura losing more than five per cent each.

"Investors rotated into beaten-down shares and sold stocks that had been strong," said Shuutarou Yasuda, a market analyst at Tokai Tokyo Intelligence Laboratory.

Software-related shares, a target of selloff in recent sessions on AI disruption fears, rose, with Nomura Research and NEC climbing three per cent each.

Sony Group jumped 5.6 per cent to become the biggest source of gains for the Topix. The audio-equipment and game maker raised its share buyback plan to up to 250 billion yen (US$1.60 billion) from 150 billion yen.

Of the more than 1,600 shares trading on the Tokyo Stock Exchange's prime market, 80 per cent stocks rose, 17 per cent fell and 2 per cent traded flat.