TOKYO, Oct. 3 (Xinhua) -- Japan's benchmark Nikkei stock index closed higher Monday as investors sought out bargains early on, with chipmakers and energy issues among the day's notable gainers.

The 225-issue Nikkei Stock Average gained 278.58 points, or 1.07 percent, from Friday to close the day at 26,215.79.

The broader Topix index, meanwhile, added 11.64 points, or 0.63 percent, to finish at 1,847.58.

Local dealers said the Bank of Japan's Tankan business survey, released just before the opening bell, showed that sentiment among large manufacturers worsened for the third-straight quarter in September.

This, they said, was compounded by the central bank's report that also indicated that the sentiment among large non-manufacturers was set to worsen in the coming months.

"A weak outlook among non-manufacturers showed they do not see a recovery in inbound tourism taking place as quickly as expected earlier, weighing on related issues such as retail," Yutaka Miura, senior technical analyst at Mizuho Securities Co., was quoted as saying.

Stronger-than-expected U.S. inflation data in August released late last week raised the prospect of further hefty rate hikes by the U.S. Federal Reserve to tame soaring inflation, at the risk of hurting its own and the broader global economy, and added to a circumspect mood early on, market strategists here said.

But stocks that had lost ground were bought back in later trade with these including some heavily-weighted components as well as automakers, they said.

By the close of play, marine transportation, transportation equipment, and mining issues comprised those that gained the most, and issues that rose outpaced those that fell by 893 to 883 on the Prime Market, while 55 ended the day unchanged.

Following chipmaker Mimasu Semiconductor Industry Co.'s solid earnings forecast for this fiscal year, other chip-related issues rallied, with Nikkei heavyweight Tokyo Electron and Advantest jumping 4.6 and 4.8 percent, respectively.

SoftBank Group helped buoy the broader market, rising 1.6 percent, while automakers advanced having lost ground last week.

Of these, Toyota Motor accelerated 3.5 percent, while Subaru gained 3 percent by the close.

On the Prime Market on Monday, 1,269.34 million shares changed hands, dropping from Friday's volume of 1,520.29 million shares.

The turnover on the first trading day of the week came to 2,912.17 billion yen (20.07 billion U.S. dollars). Enditem

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