The Nikkei stock index ended at a fresh closing high above the 40,000 mark Monday on firm technology stocks, reaching the milestone just over a week after hitting an all-time high for the first time in 34 years.
The 225-issue Nikkei Stock Average ended up 198.41 points, or 0.50 percent, from Friday at 40,109.23, after hitting a record intraday high of 40,314.64.
The broader Topix index was down 3.14 points, or 0.12 percent, at 2,706.28.
The benchmark Nikkei has gained over 1,000 points since Feb. 22 when it topped record highs marked in 1989, attracting domestic and foreign investment on strong corporate earnings, low interest rates and expectations for the economy emerging from deflation.
On the top-tier Prime Market, gainers were led by precision instrument and mining issues, while marine transportation and rubber product issues led decliners.
Although giving up some gains in the afternoon, the Nikkei remained above the 40,000 threshold, as technology issues such as Tokyo Electron and Advantest jumped tracking their U.S. counterparts on anticipation of robust demand for artificial intelligence.
Overseas investors continued to buy Japanese stocks as they are viewed as cheap compared with shares in other markets, analysts said.
"The market has been lifted by buying of undervalued large-cap stocks, while chip-related shares gained even further at the same time backed by the strength of their U.S. peers," said Seiichi Suzuki, chief equity market analyst at the Tokai Tokyo Research Institute.
While the 40,000 mark likely reflects the upbeat performance of Japanese companies, whether the Nikkei index will be able to sustain its upward momentum in the near term is uncertain given its rapid advance, brokers said.
The Japanese stock market fell into a prolonged slump after reaching its previous all-time closing high of 38,915.87 at the end of 1989 during Japan's asset-inflated bubble economy.
After the bursting of the bubble economy in the early 1990s, the index closed at the all-time low of 7,054.98 in March 2009 following the global financial crisis triggered by the bankruptcy of U.S. investment bank Lehman Brothers Holdings Inc.
Stocks regained upward momentum on the back of the Bank of Japan's aggressive monetary easing under the "Abenomics" economy-boosting program pursued by the late Prime Minister Shinzo Abe.
On the currency market on Monday, the U.S. dollar moved little mostly in the lower 150 yen range in Tokyo amid a lack of trading incentives.
At 5 p.m., the dollar fetched 150.30-32 yen compared with 150.08-18 yen in New York and 150.49-50 yen in Tokyo at 5 p.m. Friday.
The euro was quoted at $1.0853-0854 and 163.13-17 yen against $1.0835-0845 and 162.64-74 yen in New York and $1.0811-0813 and 162.70-74 yen in Tokyo late Friday afternoon.
The yield on the benchmark 10-year Japanese government bond was down 0.005 percentage point from Friday's close at 0.710 percent.
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