Nikkei bounces as chip sector tracks U.S. gains; earnings boosts rally

* BOJ maintains policy and cut price forecasts

* Advantest, Sony, Honda attract buying after earnings

* Chiyoda nosedives after co expects loss

TOKYO, Oct 31 (Reuters) - Japan's Nikkei bounced to a one-week high on Thursday as chip-related stocks surged in line with their U.S. counterparts, while first-half earnings from firms such as Sony and Honda supported sentiment.

The Bank of Japan (BoJ) kept monetary policy steady on Wednesday and cut its price forecasts, reinforcing market expectations that subdued inflation will force it to maintain its massive stimulus program for the time being.

The Nikkei share average rose 2.2 percent to 21,920.46, the highest closing level since Oct. 24.

With the Nikkei falling 12 percent from its 27-year peak hit on Oct. 2, "valuations have fallen, which have triggered bargain hunting," said Nobuhiko Kuramochi, a strategist at Mizuho Securities.

Tech shares and chip equipment makers jumped, after the Philadelphia SE Semiconductor index surged 4.2 percent overnight and helped U.S. chip shares higher.

TDK Corp surged 6.1 percent, Tokyo Electron rallied 3.6 percent and Advantest Corp, which raised its full-year operating profit forecast by 45 percent to 53 billion yen, jumped 13 percent.

Analysts said investors are taking heart from strong forecasts from Japanese manufacturers, easing worries about a hit to earnings from the heated U.S.-China trade dispute.

"The market is relieved that companies seem to take those worries in their stride for now," said Isao Kubo, an equity strategist at Nissay Asset Management.

But he added that there is still big uncertainty hanging over companies' future growth while there are signs that China's demand is falling.

Sony Corp surged 4.7 percent after the company boosted its annual profit outlook by 30 percent to a record level after a strong second-quarter, propelled by popular game titles like "Marvel's Spider-Man" as well as growing demand for its online gaming services.

Wednesday's gainers included Honda Motor Co, which jumped 6.5 percent after it raised its annual operating profit forecast by 11.3 percent to 790 billion yen ($7.0 billion) for the year ending in March 2019 thanks to a weak yen and strong sales of its motorcycles.

Defying the rally, Chiyoda Corp nosedived 21 percent and was the biggest percentage decliner on the board after the engineering company cut its forecast to an operating loss of 86.5 billion yen for the year ending March, compared with a previous forecast of 11.5 billion yen in operating profit.

The broader Topix rose 2.2 percent to 1,646.12. (Editing by Sam Holmes)