Japan's Nikkei share average advanced for a fourth straight session on Tuesday amid optimism for increased investment in the country's semiconductor industry.

Advantest Corp climbed 2.38%, extending a four-day gain to 29% on bets the chip-testing equipment maker will ride an artificial intelligence (AI) boom with its customer Nvidia Corp. Kobe Steel Ltd jumped 5.73% after the company's shares were upgraded to "buy" by Mizuho Securities.

Japan Airlines Co Ltd lost 0.71%, leading air carriers lower after oil prices climbed.

The Nikkei recovered from early declines to close up 0.3% at 31,328.16. On Monday, the gauge touched 31,560.43, a level not seen since July 1990. The broader Topix slid 0.07% to 2,159.22.

Decliners still outnumbered gainers on the Nikkei, whose blue-chip members have outperformed the broader market amid hot-money inflows from overseas.

"The Nikkei Stock Average has been rising and stocks related to semiconductors and trading companies have been on a rapid upswing," Nomura strategist Kazuo Kamitani said.

"But the rise in automobile stocks and those of emerging companies as seen on the Mothers (index) has been lackluster. Whether this rise is transient or not is a very strong question," he added.

A panel at the Ministry of Economy Trade and Industry (METI) on Tuesday proposed revising the nation's chip strategy to promote the development of energy-efficient semiconductors for generative AI. Japan's southern prefecture of Kumamoto has become a hotbed of chip industry activity of late.

Trading cues were scant after a holiday in the United States and Britain, while optimism over a resolution to the U.S. debt ceiling impasse hit a snag after a handful of Republican lawmakers said they would oppose a proposed deal.

Among the Tokyo Stock Exchange's 33 industry sectors, a sub-index of iron and steelmakers was the biggest gainer, with a 1.45% advance. A sub-index of insurers was the biggest decliner, losing 1.37%

(Reporting by Rocky Swift in Tokyo; Editing by Varun H K and Sohini Goswami)