KONTAN.CO.ID - TOKYO, Feb 9 (Reuters) - Japan's Nikkei share average hit its highest level in 34 years on Friday, buoyed by sharp gains in SoftBank Group after it returned to a profit and as shares of its chip design unit Arm surged.

The Nikkei .N225 jumped as much as 1.15% to 37,282,26, its highest since February 1990, before the midday break. The index ended the morning session 0.45% higher at 37,029.91.

"There was no reason that the Nikkei wouldn't rise as shares of heavyweight SoftBank Group rose this much," said Takehiko Masuzawa, trading head at Phillip Securities Japan.

SoftBank Group 9984.T surged 10%, rising for a second straight session, after the tech investment firm returned to profit for the first time in five quarters.

The stock boosted the Nikkei by 148 points, accounting for the majority of the index's 167-point gain.

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The jump in shares was also driven by a more-than-55% surge in Arm Holdings ARM.O, in which SoftBank owns 90%, on Thursday after the British tech company forecast quarterly sales and profit above Wall Street expectations.

The Nikkei narrowed its gains toward the end of the morning session as investors sold stocks to lock in profits, said Shuji Hosoi, senior strategist at Daiwa Securities.

"Investors wanted to sell stocks as the Nikkei reached the 37,000 milestone. The pace of the gains was too fast," said Hosoi, adding that the index has the potential to hit 40,000 in the next six months.

The broader Topix .TOPX gave up early gains to inch down 0.02% to 2,582.20, weighed by Toyota Motor's 7203.T 1.25% drop.

Nissan Motor 7201.T tanked 11.43% after the automaker trimmed its sales volume forecast for this financial year and amid worries about its business in China.

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(Reporting by Junko Fujita; Editing by Savio D'Souza)

Editor: Hasbi Maulana