TOKYO, March 26 (Reuters) - Japanese shares closed higher on Friday, with SoftBank leading the gains on the Nikkei index, as investors scooped up beaten-down names after their sharp retreat this week.

The Nikkei share average ended 1.56% higher at 29,176.70, while the broader Topix advanced 1.46% to close at 1,984.16.

For the week, the Nikkei shed 2% and the Topix was down 1.4%.

"This is a reaction from a sharp fall this week," said Takashi Hiroki, chief strategist at Monex Securities.

"Investors have been selling stocks to rebalance their portfolios toward the end of the fiscal year ending March and that weighed on the indexes."

Aiding sentiment, Wall Street closed higher overnight on renewed optimism for economic recovery after U.S. President Joe Biden pledged to double his administration's vaccination rollout plan.

Nikkei heavyweight SoftBank Group rose 1.8%, making it the biggest contributor to the index, followed by chip testing equipment maker Advantest, which jumped 4.65%.

Uniqlo brand clothing store operator Fast Retailing , up 0.88%, also lifted the Nikkei index.

Toyota Motor and Sony were the biggest contributors to the Topix, rising 2.48% and 1.96%, each.

All the 33 sector sub-indexes on the Tokyo exchange traded higher, with transport sector leading gains.

The largest percentage gainers on the index were IHI up 5.13%, followed by Aeon's 4.79% gain.

Citizen Watch, down 1.76 %, was the biggest percentage loser on the index, followed by Showa Denko losing 1.71 % and Tokai Carbon falling 1.52 %.

There were 195 advancers on the Nikkei index against 25 decliners. (Reporting by Junko Fujita; editing by Uttaresh.V)