TOKYO, Jan. 10 (Xinhua) -- Japan's benchmark Nikkei stock index closed at a two-week high on Tuesday, on hopes the U.S. Federal Reserve may ease its aggressive interest rate hikes, with technology issues buoyed by their U.S. peers' overnight advance.

The 225-issue Nikkei Stock Average added 201.71 points, or 0.78 percent, from Friday to close the day at 26,175.56.

The broader Topix index, meanwhile, gained 5.12 points, or 0.27 percent, to finish at 1,880.88.

Dealers here said that data showing wage growth in the U.S. coming in at a rate slower than median market forecasts raised hopes the Fed could loosen its aggressive monetary tightening policy.

They added that this led to investors buying back stocks that were oversold in recent sessions.

Although the Nikkei ended above the psychologically important 26,000 mark, market strategists said that following technology issues gaining early on after the Nasdaq's advance, buying slowed in later trade as the yen firmed against the U.S. dollar.

"Treasury yields fell and the Nasdaq gained momentum in the U.S. overnight. So, investors bought Japanese stocks but the gains were limited," Shuji Hosoi, senior strategist at Daiwa Securities, was quoted as saying.

Analysts here also said that investors were now eyeing the Bank of Japan's policy-setting meeting next week with some concerns, following the central bank's surprise policy tweak last month, seen as a move towards a bigger departure from its ultra-loose policy.

"Investors are cautious about the Bank of Japan's decision to be made at a policy meeting next week. The bank surprised investors last month, and the central bank may do something similar," Hosoi said.

Among technology issues finding favor, Nikkei heavyweights Tokyo Electron and Advantest gained 3.1 and 1.9 percent, respectively.

Daikin Industries, an air-conditioning maker, jumped 5.3 percent, while technology investor SoftBank Group ended the day 2.4 percent higher.

Utility-oriented issues weighed on the market, however, with Tokyo Electric Power Company Holdings slumping 4.2 percent, while Kansai Electric Power closed 2.8 percent lower.

By the close of play, iron and steel, machinery, and marine transportation issues comprised those that gained the most.

Issues that rose outpaced those that fell by 955 to 809, while 74 ended the day unchanged.

On the Prime Market on Tuesday, 1,111.14 million shares changed hands, dropping from Friday's volume of 1,073.51 million shares.

The turnover on the first trading day of the week came to 2,755.41 billion yen (20.85 billion U.S. dollars).

Markets here were closed on Monday for a national holiday. Enditem

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