TOKYO, Dec 6 (Reuters) - Japan's Nikkei share average traded sharply higher on Wednesday, rebounding from a steep decline in the previous session, as investors bought back beaten-down chip-related stocks.

By 0207 GMT, the Nikkei index was up 1.7% at 33,321.54, while the broader Topix had gained 1.41% to 2,375.80.

"Overnight gains on the Nasdaq and declines on U.S. Treasury yields prompted investors to buy back chip and other technology stocks which were oversold in the previous session," said Shoichi Arisawa, general manager of the investment research department at IwaiCosmo Securities.

On Tuesday, the Nasdaq gained 0.31%, while the S&P 500 and Dow Jones Industrial Average fell as fresh employment data bolstered bets that the U.S. Federal Reserve will cut interest rates as soon as March.

The 10-year U.S. Treasury yield fell to three-month lows.

"With the declines in the previous session, the Nikkei has adjusted its pace of gains after posting a sharp rally last month," Arisawa said.

The Nikkei posted its steepest drop in nearly six weeks on Tuesday as elevated U.S. Treasury yields drove a heavy sell-off in Advantest and other chip-related stocks.

Chip-making equipment maker Tokyo Electron rose 2.13% and chip-testing making equipment maker Advantest gained 1.91%.

Other chip-related stocks rose, with Lasertec and Shin-Etsu Chemical up 4.91% and 2.72%, respectively.

Sakura Internet surged 10.17%, posting a sharp rally for a third straight session as Nvidia CEO Jensen Huang said this week the U.S. semiconductor giant would work with Japanese companies such as Sakura Internet to build artificial intelligence factories for Japan.

Shares of the cloud service provider have gained nearly 90% in the past month.

Of the 225 Nikkei components, 213 stocks rose and 12 fell.

(Reporting by Junko Fujita; Editing by Jacqueline Wong)