* Nikkei up 1.1 percent, brushes highest level since June 29
* Banking shares rise, tracking rally by U.S. peers
* Exporters lifted as yen drops to 1-week low vs dollar
* Yahoo Japan up, SoftBank Group to buy its shares via subsidiary
By Shinichi Saoshiro
TOKYO, July 10 (Reuters) - Japan's Nikkei share average rose to a 1-1/2-week high on Tuesday, thanks to a solid Wall Street performance, while Yahoo Japan surged on news that SoftBank Group would buy roughly $2 billion worth of its shares through a subsidiary.
The Nikkei was up 1.1 percent at 22,294.40 after hitting a high of 22,316.27, its strongest since June 29.
Equities were boosted after the Dow and the S&P 500 posted their biggest gains in over a month overnight, with focus steadily turning away from U.S.-China trade angst that buffeted financial markets last week.
"Other markets are leaning towards 'risk on' and this is supportive for Japanese shares. There are also expectations that trade frictions won't worsen," said Chihiro Ohta, equity general manager at SMBC Nikko Securities, tipping the Nikkei to stretch its recent highs.
Yahoo Japan Corp was up 10 percent after rising as much as 11.66 percent as SoftBank Group Corp said on Tuesday that its unit, SoftBank Corp, would buy 221 billion yen ($1.99 billion) worth of shares in the company, a 10.78 percent stake, held by U.S. investment firm Altaba Inc.
Bank shares gained, tracking a rally in their U.S. peers. Mitsubishi UFJ Financial Group rose 3.0 percent, Mizuho Financial Group advanced 1.5 percent and Sumitomo Mitsui Financial Group added 2.4 percent.
Exporters such as high-techs and automakers were buoyed by the yen's retreat to a one-week low against the dollar, with Tokyo Electron gaining 1.5 percent and Advantest Corp up 1.49 percent.
Honda Motor Co rose 1.6 percent and Mazda Motor Corp climbed 1 percent. Nissan Motor Co gained 2.9 percent, despite the automaker's admission on Monday that it had improperly measured exhaust emissions and fuel economy for 19 vehicle models sold in Japan.
The broader Topix advanced 1 percent to 1,729.01. ($1 = 110.9700 yen) (Additional reporting by the Tokyo markets team Editing by Shri Navaratnam)