TOKYO, May 29 (Reuters) - Japan's Nikkei index rose on Friday, heading towards record highs, buoyed by renewed optimism about a near-term Middle East peace deal and enthusiasm for artificial intelligence stocks following strong earnings from Dell Technologies.

The Nikkei advanced 2.1 percent in early trading to 66,041.83 points, approaching its all-time high of 66,428.81 points reached on Wednesday.

The broader Topix index rose 1.5 percent to 3,961.31 points, nearing its all-time high of 3,971.77 points reached on Wednesday.

Sources told Reuters that the United States and Iran had reached an agreement to extend the ceasefire and lift restrictions on navigation in the Strait of Hormuz, but US President Donald Trump has not yet approved it, and Iranian state media said it has not yet been finalized.

Stocks have been volatile in recent days due to conflicting news about progress in negotiations between Washington and Tehran, but on a weekly basis, the Nikkei and Topix are on track to achieve gains of 4.1 percent and 1.5 percent respectively.

The Nikkei index outperformed largely due to the heavy focus on technology stocks and the significant weight of some AI favorites such as SoftBank Group, whose shares jumped 5.9 percent on Friday.

A day earlier, Dell raised its annual revenue and profit forecasts, indicating that the expansion of customer data centers is fueling demand for the company's AI-optimized servers.

Of the 225 stocks on the Nikkei index, 173 rose, 50 fell, and two remained unchanged.

Shares of Sumco, a silicon manufacturer, rose by more than 18 percent, making it the biggest gainer in the index in terms of percentage.

However, not all AI stocks benefited from Dell's stock surge, as data center cable maker Fujikura and Furukawa Electric saw their shares fall by 6.2 percent and 4.6 percent respectively, making them the worst performers on the Nikkei.