TOKYO, Oct 11 (Reuters) - Japan's Nikkei share average rose for a second session on Wednesday and was on track for its highest close this month, as chip stocks led a rally on bets for a more dovish U.S. Federal Reserve.

The tech-heavy Nikkei was up 0.49% at 31,902.24 as of 0224 GMT, building on Tuesday's 2.4% surge.

Chip-related shares comprised three of the four biggest percentage gainers, led by Lasertec's 5.4% jump. Advantest gained 3.9% and Tokyo Electron rose 2.5%.

However, looking stock by stock, the Nikkei's performance was more mixed, with 94 of its 225 components rising versus 128 that fell, with three flat.

The broader Topix index rose just 0.05%.

Overnight, the tech-focused Nasdaq led gains among Wall Street's big three indexes, and the Philadephia SE Semiconductor Index advanced 1.3%.

Atlanta Fed Bank President Raphael Bostic said on Tuesday the central bank did not need to raise borrowing costs any further, and Minneapolis Fed President Neel Kashkari followed with similar remarks later in the day.

Long-term Treasury yields, whose months-long surge had fuelled jitters across asset classes, continued their decline from the 16-year highs reached last week.

"For the time being, there's a sense that U.S. yields have peaked out," helping to lift sentiment, said Kazuo Kamitani, a strategist at Nomura Securities.

Whether the Nikkei can reclaim the psychological 32,000 mark will be a focus this week, but currently the rebound is starting to "feel heavy," and overall "there's little sense of direction" for Japanese stocks, he said.

Other than tech, retailers performed particularly well after department store operator J. Front Retailing said it would revise up earnings forecasts, helped by both tourist spending and wealthy domestic customers.

J. Front gained 1.5% and peers Isetan Mitsukoshi Holdings and Takashimaya Co added 1.6% and 1.4%, respectively. (Reporting by Kevin Buckland; Editing by Rashmi Aich)