TOKYO Japan's Topix stock index climbed to a 34-year high on Friday, as banks gained amid a gradual rise in domestic bond yields, and technology shares rebounded from a sell-off in the previous day.

The Topix ended the morning session up 0.82% at 2,816.51, having earlier hit its highest since the country's asset bubble burst in January 1990 at 2,821.86.

A sub-index of value shares jumped 1.05%, outpacing a 0.56% gain for growth shares.

The more tech-heavy Nikkei rallied 0.98% to 29,727.91, recouping all of Thursday's 0.82% slide, but falling slightly short of Wednesday's high.

Of the Nikkei's 225 components, 158 rose versus 63 that fell, with four flat.

The release of a closely watched US inflation indicator later in the day and crucial French elections this weekend, however, gave investors reasons to be cautious, said Maki Sawada, an equity strategist at Nomura Securities.

"With events like those coming up, it's very hard to chase the Nikkei higher," she said.

The top performing sectors on the Tokyo Stock Exchange were insurance, banking and securities, up 2.92%, 2.52% and 1.61%, respectively.

Benchmark 10-year Japanese government bond yields rose to 1.08%, garnering support from hot Tokyo consumer price data that argued for another rate hike at the Bank of Japan's July policy meeting.

Shares linked to chips and artificial intelligence (AI) were big winners on the Nikkei.

AI-focused startup investor SoftBank Group rallied 3.21% to be the biggest points gainer on the index.

Chip-making equipment giant Tokyo Electron and chip-testing machinery manufacturer Advantest were next, advancing 1.61% and 3.33% respectively.

Advantest peer Lastertec jumped more than 4%.

  - Reuters