* Pierces crucial resistance levels
* BOJ decision has little impact
* Chip-related shares gain
By Ayai Tomisawa and Antoni Slodkowski
TOKYO, Jan 25 (Reuters) - Japan's Nikkei average climbed for a second straight session on Tuesday, breaching key resistance levels as it regained some of the ground lost last week.
The market showed little reaction to a decision by the Bank of Japan to keep interest rates at practically zero.
The benchmark Nikkei, which traded around 10,470 after the BOJ's announcement, was primarily reacting positively to rallies in other Asian markets, said Susumu Kato, chief economist at Calyon Credit Agricole CIB.
Market participants said there was cautious optimism ahead of earnings announcements by major Japanese companies this week but it would be actual results and company guidance about long-term growth potential that would decide if the benchmark maDe further substantial gains.
Financials, property and high-tech shares were among the biggest gainers, with foreign investors detected buying sectors that had fallen prey to profit-taking last week.
Last Friday the Nikkei booked its biggest daily fall in two months, mainly hit by worries about monetary tightening by China.
Canon Inc and Kyocera Corp as well as Japan's biggest personal computer firm, NEC Corp, will report this week, and could set the tone of the October-December earnings season lasting until early February.
Many analysts expect robust results based on a pickup in the global economy and demand in the United States, as well as a slightly stronger dollar against the yen than many firms expected.
They also say there will be more emphasis than usual on company comments about longer-term growth prospects.
"Stocks have risen a lot over the quarter and strong earnings are at least partly already priced in by investors, so they will not only want to see the figures for the quarter but also how those firms can sustain growth in the long run," said Masayoshi Okamoto, head of dealing at Jujiya Securities.
Brokers have listed cost controls, structural changes, exposure to growing Asian markets and foreign currency hedging as focal points.
At 0431 GMT the benchmark Nikkei was up 1.1 percent at 10,456.77.
Some Asian markets were higher, with Hong Kong's Hang Seng index gaining 0.5 percent and Seoul's KOSPI adding 0.8 percent.
The Nikkei breached two crucial resistance levels, its closely watched 25-day moving average, now at 10,403.61, and then 10,420, where December futures and option prices settled.
The broader Topix added 1.3 percent to 929.30.
Makers of semiconductor manufacturing equipment were higher, with Dainippon Screen rising 4.3 percent to 733 yen after the Nikkei business daily reported the firm saw a 32 percent year-on-year increase in the value of orders in the October-December quarter.
The report was also helping other shares in the sector, such as Nikon, which makes steppers, said a trader who asked not to be quoted by name.
Nikon Corp added 3.4 percent to 1,935 yen. Ibiden Co, which supplies IC packages to Intel Corp, added 3.1 percent to 2,787 yen.
Banking shares staged a rally as buying by foreigners pushed financial stocks higher, market participants said. Mitsubishi UFJ Financial Group, Japan's largest bank by assets, rose 2.5 percent to 452 yen, while Sumitomo Mitsui Financial Group added 1.9 percent to 2,949 yen. The banks were two most actively traded shares on the main board.
The banking sector has gained 23 percent since November, but is still considered undervalued as its price-to-book ratio stands at 0.7, underperforming the average PBR of 1.2 for the Nikkei 225 components.
A share is seen as undervalued if the PBR is below 1.0.
Dividend yields at Japanese banks are also seen as more attractive than other Nikkei components, as they stand at 2.8 percent compared with the average for the Nikkei of 1.6 percent.
"This rise is connected to valuations, but a lot of that is simple buying back after those shares fell rapidly at the end of last week," said Mitsuo Shimizu, deputy general manager at Cosmo Securities.
But Resona Holdings fell 4.5 percent to 446 yen after it said it would raise $6.6 billion in its global share offering, less than expected, in a sign investors are sceptical of the Japanese bank's growth prospects as it weans itself from government control.
TDK Corp rose 2.5 percent to 5,800 yen after the Nikkei business daily reported it had developed a way to manufacture miniature modules for smartphones that pack features into a 30 percent smaller footprint. ($1=82.52 Yen) (Editing by Michael Watson)