(Updates for market close)

By Brigid Riley

TOKYO, March 25 (Reuters) - Japan's Nikkei share average

snapped a three-day losing streak on Tuesday, as indications

that impending U.S. tariffs may be more measured than previously

feared injected fresh optimism into the markets, though ongoing

uncertainty capped the gains.

The Nikkei closed 0.5% higher at 37,780.54. Earlier

in the session, the index climbed more than 1% and briefly

reclaimed the crucial 38,000-point level.

The broader Topix touched an eight-month peak of

2,818.36, and finished 0.2% higher at 2,797.52.

Japanese equities took their cues from all three major U.S.

stock indexes finishing sharply higher on Monday after investors

took the latest comments from U.S. President Donald Trump as a

sign of flexibility on the tariff blitz that has rocked

markets.

While the broad gains across U.S. stock indexes reassured

investors, it remained uncertain how long the optimism will

last, according to Masahiro Ichikawa, chief market strategist at

Sumitomo Mitsui DS Asset Management.

"There are still many unknowns, like what specific tariffs

will be announced on April 2, and we won't know until next

week," said Ichikawa.

Gains by heavyweight chip-related shares narrowed during

afternoon trading, taking some of the momentum out of the

Nikkei's rebound. SoftBank Group edged 0.4% higher and

Tokyo Electron ( TOELF ) added 0.5%.

Shares of Advantest ( ADTTF ), which counts AI darling Nvidia ( NVDA )

among its customers, extended losses to end 3.4% lower.

Toyota Motor ( TM ), up 0.7%, was among Japanese carmakers

to get a boost from hopes that U.S. tariffs on auto imports

might not be as severe as anticipated.

Exporter-related shares also received support from a

weaker yen, with the dollar last trading at 150.55 yen

after the Japanese currency depreciated overnight.

Among other major stocks, Uniqlo parent company Fast

Retailing ( FRCOF ) gained 0.6%, providing the largest boost to

the Nikkei.

Electronic components maker TDK Corp ( TTDKF ) gained 1.8%,

and medical equipment maker Terumo ( TRUMF ) climbed 2.5%.

Game manufacturer Nexon ( NEXOF ) rallied 9% to top the rank

of percentage gainers.