TOKYO, Oct 28 (Reuters) - The Nikkei share average ticked up on Monday to a one-year high, with investors shifting funds to global cyclicals from domestic demand-oriented shares on hopes of a U.S.-China trade deal.
The Nikkei share average rose 0.27% to 22,861.59, hitting its highest levels in a year.
The broader Topix gained 0.08% to 1,649.79.
Lifting the mood were comments from U.S. and Chinese officials that they are "close to finalizing" some parts of a trade agreement after high-level telephone discussions on Friday.
Traders reacted quickly by buying shares perceived to be sensitive to global economic cycles, including semi-conductor chip-related shares and shipping firms.
Chip-related shares topped the list of biggest gainers in the Nikkei in morning trade.
Sumco rose 4.9%, Screen Holdings 4.2% and Taiyo Yuden 3.4%.
Industrial robot manufacturer Fanuc gained 2.4% while Honda Motor edged up 1.2%.
Shippers also advanced with Mitsui OSK Lines gaining 2.0% and Nippon Yusen up 1.3%.
On the other hand, investors pulled some funds out of domestic demand oriented shares, which they had bought to reduce exposure to trade war risks.
The Tokyo Stock Exchange's foods company subindex shed 0.9% while its real estate industry subindex lost 0.8%.
Defensive shares were also not in favour, with land transport shares, such as railway operators, and drugmakers both under water.
East Japan Railway, which has been also hit by damages from torrential rains in recent weeks, fell 1.6% while Mitsubishi Estate dropped 1.0%.
Elsewhere, Suruga Bank rose 10.5% after Nojima Corp said on Friday it will buy all the remaining stake of the troubled bank held by its founder family.
Nojima, operator of electronic goods chain, gained 1.3%. (Editing by Sonya Hepinstall)