By Kevin Buckland
TOKYO (Reuters) -Japan's Nikkei share average on Monday crossed the 36,000 mark for the first time in 34 years, powered by shippers and financials, with a retreat in U.S. bond yields and a stabilisation in the yen exchange rate buoying sentiment.
The Nikkei finished the day nearly 1% higher at 35,901.73, after touching the highest since February 1990 at 36,008.23.
Value shares outperformed after lagging growth stocks last week when the Nikkei index booked its best performance in 22 months.
The broader Topix, which is less weighted towards technology shares than the Nikkei, rose 1.22% on the day and also touched a new 34-year high during the session.
The Topix value share sub-index climbed 1.55%, outpacing a 0.88% rise for the growth share sub-index.
The Tokyo Stock Exchange's (TSE) shippers index jumped 5.3% to lead gains among the 33 industry groups, with geopolitical risks pushing up shipping rates.
Shares of financials, which had retreated sharply on Friday, rebounded strongly. The TSE's index of securities firms rallied 4.56%, while banking advanced 2.19%.
The continued gains for Japanese stocks come despite signs of overheating. One closely watched technical indicator called the relative strength index, or RSI, climbed to 76.41 for the Nikkei, with readings above 70 signaling "overbought" conditions.
"The Nikkei is displaying surprising strength", and some form of adjustment in the speed of the rally is likely this week, said Kazuo Kamitani, a strategist at Nomura Securities.
Providing another tailwind, after the close of Monday's trading, the TSE will begin publishing a monthly list of companies that have disclosed plans to boost capital efficiency.
The TSE's corporate governance initiatives are "generating a lot of excitement," said Daniel Hurley, portfolio specialist of emerging market and Japan equities at T. Rowe Price.
"It's why foreign investors, activist investors, hedge funds and Warren Buffett and Berkshire Hathaway (NYSE:BRKa) are paying close attention to Japan today."