* Nikkei, Topix get near to August peaks
* Fed easing supports sentiment on economy
* Profit-taking curbing rally in Japanese shares
By Hideyuki Sano
TOKYO, Sept 19 (Reuters) - Japanese shares rallied to close
in on this year's peaks on Thursday, with domestic demand-led
shares leading gains after a rate cut by the U.S. Federal
Reserve helped boost risk sentiment.
The Nikkei share average .N225 rose as much as 1.34% to
22,255.56, edging near its year-to-date high of 22,362 hit in
late August. It closed up 0.38% at 22,044.45.
The broader Topix .TOPX gained up to 1.24% to 1,626.52,
coming within reach of its Aug. 17 peak of 1,633.96. It ended
0.56% higher at 1,615.66.
The market's gains were trimmed after the Bank of Japan kept
its policy on hold, a widely expected decision but still
disappointing some players who had bet the BOJ to act in-step
with the Fed and the European Central Bank in easing.
The Fed cut interest rates for a second time this year,
although it signalled further rate cuts are unlikely as the
labour market remains strong. Japanese index players were taking profits as the indexes
neared the peaks while other players were rebalancing into
shares dependent on domestic demand.
Among them, Recruit Holdings 6098.T gained 3.1% while
Mitsubishi Estate 8802.T rose 2.0%.
High-yielding power company shares were also bought after
the U.S. interest rate cut.
Kansai Electric Power Co Inc 9503.T rose 2.7% and Chubu
Electric Power 9502.T gained 1.7%.
Railway operators were also in favour. Keisei Electric
Railway 9009.T closed at a near three-decade high, ending
1.6% higher. Odakyu Electric Railway 9007.T rose 2.4%.
Despite lingering worries about the U.S.-China trade war,
hopes that the worst may be over soon are supporting the market,
especially in the battered semi-conductor sector.
Advantest Corp 6857.T rose 1.5% and Shin-etsu Chemical
4063.T went up 0.6%.
Broader electronics makers also did well, with Fujitsu
6702.T rising as much as 3.3% to hit a 21-month high and Oki
Electric 6703.T gaining 1.8%.
Still, while signs that Washington and Beijing are ready to
resume their trade talks have helped to ease investor sentiment
in recent weeks, many market players are not convinced how far
the Nikkei's rally can continue.
"In the past, you were better off selling when the market
has risen on hopes of a trade deal," said Naoya Oshikubo, senior
manager of research at Sumitomo Mitsui Trust Asset Management.
Japan Tobacco 2914.T bucked Thursday's trend, falling 0.7%
after India banned the sale of electronic cigarettes.
(Editing by Richard Borsuk)