* Topix rises to highest levels since July 2007
* Oil sector slips as crude futures wither
By Lisa Twaronite
TOKYO, Oct 12 (Reuters) - Japan's Nikkei share average scaled its loftiest peak in more than two decades on Thursday, hoisted by records on Wall Street that offset weakness in oil-related shares.
The Nikkei was up 0.5 percent at 20,978.56 at the end of morning trade, after earlier rising as high as 20,980.92, its highest since December, 1996.
The broader Topix was 0.3 percent higher at 1,702.37, after touching 1,703.67, its highest since July 2007.
On Wall Street on Wednesday, major stock indexes finished at record closing highs, bolstered by a report that a market-friendly candidate was being pushed as successor to Federal Reserve Chairman Janet Yellen. "Japan doesn't live in isolation. If other parts of the word are exciting, then Japan ultimately has to be exciting, too," said Stefan Worrall, director of Japan equity sales at Credit Suisse in Tokyo.
"It's very much dependent, as a market, on the mood of the world, and that mood is clearly improving despite a lot of potential risks and headwinds," he said.
Shares of Kobe Steel, which have plunged more than 35 percent this week after the steelmaker was caught up in a data fabrication scandal, gained 1.1 percent.
A senior Japanese trade official said on Thursday that the trade ministry was treating the data fabrication as a serious matter that affected trust in the country's manufacturing industry.
Japan's Toshiba Corp shares added 4.1 percent after the Tokyo Stock Exchange said on Wednesday that it was taking the beleaguered electronics giant off a special watchlist, citing improved internal controls. The move lessens but does not completely remove the risk of a delisting.
Restaurant operator Saizeriya Co soared 7.9 percent after it reported on Wednesday a 36.2 percent rise in its group net profit in its past business year, and forecast a 12.1 percent rise for the current the year through Aug. 31, 2018.
Aomori Bank shares jumped 13.4 percent after the regional lender said it will scrap a plan to issue new shares, which it had announced on Oct. 3.
On the losing side, the oil and coal sub-index shed 1.4 percent and the mining sub-index dropped 1.6 percent. Oil prices eased on Thursday as U.S. fuel inventories rose despite efforts by OPEC to cut production and tighten the market.
The JPX-Nikkei Index 400 rose 0.3 percent to 15,024.01. (Reporting by Lisa Twaronite; Editing by Eric Meijer)