* Insurers high after U.S. yields soar on Mon
* Electronic suppliers fall after Apple says Trump's decision could hit its products
* Start Today volatile
By Ayai Tomisawa
TOKYO, Sept 18 (Reuters) - Japan's Nikkei rallied on Tuesday led by gains for insurers thanks to rising U.S. Treasury yields, though electronic suppliers underperformed as traders considered the implications of fresh U.S. tariffs on Chinese goods.
Hopes around the Liberal Democratic Party's leadership election this week also helped pushed up the Nikkei share average, which opened lower but gained 1.1 percent to 23,342.85 by the midday break, hovering at more than seven-month highs. Japanese markets were closed for a national holiday on Monday.
U.S. President Donald Trump imposed 10 percent tariffs on about $200 billion worth of Chinese imports on Monday, but spared smart watches from Apple and Fitbit and other consumer products such as bicycle helmets and baby car seats.
Analysts said that the move was expected, so even though the market opened with a weaker note, investors seemed to have quickly priced in the news and looked to domestic events.
Prime Minister Shinzo Abe, who returned to office in December 2012 pledging to bolster defences and reboot the economy, is widely expected to defeat his rival, former defence minister Shigeru Ishiba, in a Sept. 20 election for leader of his Liberal Democratic Party.
"Expectations that Abe will win the election are raising hopes that Japan's political stability will continue," said Takatoshi Itoshima, a strategist at Pictet Asset Management.
Japanese shares were bought broadly, with all of the Topix's 33 subsectors in positive territory.
Insurers, which hunt for higher yielding products, led the gains after U.S. Treasury yields soared on Monday on hopes the U.S. central bank could raise interest rates twice more this year. Dai-ichi Life Holdings surged 3 percent and MS&AD Insurance jumped 3.4 percent.
On the other hand, electronic suppliers underperformed after
Apple Inc said Trump's tariff decision could hit a "wide range" of its products.
While Trump will spare Apple's Watch and other consumer gadgets from the latest round of tariffs on Chinese goods, parts for the computer servers and networking gear that power "cloud" data centres and Internet-based services now face a levy, as do some of the parts for the machines used to make semiconductors.
Murata Manufacturing shed 1.2 percent, Alps Electric tumbled 2.2 percent and Kyocera Corp declined 0.4 percent.
Elsewhere Start Today Co was volatile, falling as much as 4.7 percent and rising 0.8 percent before ending the morning session down 0.9 percent at 3,250 yen. SpaceX, Elon Musk's space transportation company, on Monday named its first private passenger as Yusaku Maezawa, the founder and chief executive of the online fashion retailer.
The broader Topix gained 1.1 percent to 1,747.64. (Editing by Shri Navaratnam)