TOKYO, Sept 26 (Reuters) -

Japan's Nikkei share average fell on Tuesday dragged by declines in heavyweight chip-related shares, but value stocks limited losses as investors scooped those up to get the right to dividend payouts.

The Nikkei index was down 0.91% to 32,379.85 by the midday break.

"Growth shares weakened amid concern about rising U.S. Treasury yields," said Takehiko Masuzawa, trading head at Phillip Securities Japan.

"While gains in value stocks supported the market as investors bought stocks with higher dividend payouts," he said.

Investors need to buy stocks by the next session to get the right to dividend payouts for companies that count September as the end of their half-year.

U.S. Treasury yields extended rises, hitting its highest level since October 2007 in Asian trading, amid expectations the U.S. Federal Reserve was likely to keep interest rates at higher levels for longer than initially anticipated.

Chip-making equipment maker Tokyo Electron slumped 3.44% to become the biggest drag for the Nikkei. Chip-testing making equipment maker Advantest lost 2.42%.

The broader Topix was down 0.49% to 2,373.81, a smaller slide than the Nikkei as investors bought value stocks set to go ex-dividend in the next session.

Value shares, whose growth is slower, tend to pay higher dividend to attract investors, while growth stocks tend to get hurt by higher interest rates as their potential lies in future cash flows.

Electronic machinery makers lost 1.02% to become the worst performing sector among 33 industry sub-indexes on the Tokyo Stock Exchange. The transport sector lost 1.01%.

The insurance sector rose 1.01% to become the top performing sector and shipping firms gained 0.54%.

Japan Exchange Group jumped 3.06% to become the top performer on the Nikkei after the operator of the Tokyo Stock Exchange raised an annual net profit forecast.

(Reporting by Junko Fujita; Editing by Nivedita Bhattacharjee)