* Dow trading above 20,000 lifts investor sentiment
* Fanuc earnings widely focused with optimism on Thursday
By Ayai Tomisawa
TOKYO, Jan 26 (Reuters) - Japan's Nikkei share average surged to more than a two-week high on Thursday morning tracking strength in Wall Street, while financial stocks were in demand after U.S. yields rose.
The Nikkei gained 1.5 percent to 19,345.85 in midmorning trade after hitting as high as 19,354.48 earlier, the highest level since Jan. 11.
U.S. Treasury yields increased overnight with benchmark yields hitting a four-week high, while the Dow Jones Industrial Average closed atop the 20,000 mark for the first time.
Also helping the Japanese market is expectations for Japan Inc's strong third-quarter earnings helped by a weaker yen, a trend seen after Donald Trump was elected as U.S. president in mid November. The dollar has been strong on hopes that his economic policies will stoke U.S. growth.
"Today's excitement mainly comes from strong U.S. stocks overnight, but people are also positive about Japanese companies' earnings especially machinery manufacturers," said Takuya Takahashi, a strategist at Daiwa Securities.
Since industrial robots maker Yaskawa Electric Corp raised its full-year earnings forecast on Monday, expectations for other machinery companies have risen, Takahashi said.
Factory automation machinery maker Fanuc Corp whose Thursday earnings is widely focused, surged 2.7 percent, while chip-testing equipment maker Advantest Corp, which will also release its results later in the day, added 1.9 percent.
Financial stocks staged a rally, with the banking sector and the securities sector rising 2.9 percent and 3.6 percent, respectively. The insurance sector also gained 3.4 percent.
Mitsubishi UFJ Financial Group soared 4.0 percent, Sumitomo Mitsui Financial Group added 3.1 percent, Nomura Holdings up 4.3 percent and Daiwa Securities gained 3.6 percent.
Dai-ichi Life Holdings surged 3.2 percent and Sompo Holdings surged 3.4 percent.
The broader Topix gained 1.4 percent to 1,542.90 and the JPX-Nikkei Index 400 advanced 1.5 percent to 13,840.59. (Editing by Simon Cameron-Moore)