* Nikkei highest since May 7
* Chip-related stocks, electric component makers surge
* JSR falls on Japan high-tech export restrictions to South Korea
By Ayai Tomisawa
TOKYO, July 1 (Reuters) - Japan’s Nikkei surged to near two-month highs on Monday morning as risk sentiment improved after the United States and China agreed to restart trade talks, while tech share also got a lift on an easing of restrictions on Huawei.
The Nikkei share average jumped 1.8% to 21,658.93 at the midday break, after hitting a high of 21,669.65 the best level since May 7.
China agreed to make unspecified new purchases of U.S. farm products and return to the negotiating table, after a weekend meeting between U.S. President Donald Trump and Chinese President Xi Jinping. No deadline was set for progress on a deal, and the world’s two largest economies remain at odds over significant parts of an agreement.
Trump offered an olive branch to Xi on Huawei Technologies Co, the world’s biggest telecommunications network gear maker. Washington had put Huawei on an export blacklist citing national security issues, barring U.S. suppliers from selling to the company without special approval.
Trump said the U.S. Commerce Department would study in the next few days whether to take Huawei off the list of firms banned from buying components and technology from U.S. companies without government approval.
“These are all positive news to the market,” said Shogo Maekawa, global market strategist at JPMorgan Asset Management. “The part about Huawei was particularly a positive surprise to the market.”
Chip-related shares and electric components maker rallied. Tokyo Electron surged 4.7%, Advantest jumped 6.1%, TDK Corp advanced 6%, Sumco Corp added 3.7% and Minebea Mitsumi rose 4%.
Other companies which have high exposure to China also gained ground. Murata Manufacturing jumped 5.3%, Yaskawa Electric Corp surged 4.6% and Keyence Corp added 2.8%.
On the other hand, resin products maker JSR Corp dropped 3.5% after the industry ministry said that Japan would tighten restrictions on exports of high-tech materials used in smartphone displays and chips to South Korea in response to a South Korean ruling on war-time forced labour.
The broader Topix surged 1.7% to 1,576.75, with all of its 33 subsectors in positive territory. (Editing by Jacqueline Wong)