Japan's Nikkei slumps amid US AI curbs, BOJ hike speculation

(Updates with closing prices)

By Kevin Buckland

TOKYO, Jan 14 (Reuters) - Japan's Nikkei share average slumped on Tuesday as investors sold semiconductor stocks after the U.S. government said it would further restrict artificial intelligence (AI) chip and technology exports.

The Japanese market, coming off a holiday on Monday, was also catching up to the global equities selloff after strong U.S. jobs data on Friday spurred market participants to contemplate the potential for no Federal Reserve interest rate cuts this year.

Meanwhile, Bank of Japan Deputy Governor Ryozo Himino, speech to Japanese business leaders, left the door open to a rate hike at the conclusion of the next policy meeting on Jan. 24.

The Nikkei index ended the day down 1.83% at 38,474.30. It had dropped as much as 2.26% to 38,305.91 during the session, its lowest since Dec. 2.

The broader Topix fell 1.16%.

Local government bond yields hit fresh 14-year peaks, tracking the surge in U.S. yields since the jobs data, weighing on equities.

Adding to the air of caution was the release of U.S. consumer inflation data on Wednesday as well as the start of the U.S. earnings season.

However, "if U.S. earnings are broadly positive, that should support U.S. stocks and feed through to gains for Japanese stocks as well," said Maki Sawada, an equities strategist at Nomura Securities.

On the day, 169 of the Nikkei's 225 components declined, while 51 rose and five were flat.

The biggest decliner in both percentage and index points terms was chip-testing equipment maker Advantest (ADTTF), an Nvidia (NVDA) supplier, which plunged 9.21%.

Tech was the worst-performing Nikkei sector, sliding more than 2%.

Japanese earnings reports also spurred some eye-catching moves.

Yaskawa Electric (YASKF) slumped 4.31%, while Ryohin Keikaku (RYKKF), owner of the MUJI stores, rallied 4.67% to be the Nikkei's biggest percentage riser.

Energy shares outperformed due to a rise in oil prices, with refiner Idemitsu Kosan advancing 2.11%. (Reporting by Kevin Buckland; Editing by Savio D'Souza and Janane Venkatraman)