Chip-industry stocks led a rally in Japan's Nikkei share average on Friday, lifting the benchmark index to a weekly gain.

The Nikkei advanced 1.4% to close at 35,963.27. For the week, it rose 1.09%, despite starting trade with a small loss.

The index rose as high as 36,076.23 in the session, closing in on Wednesday's 34-year peak at 36,239.22, but was unable to stay above the key 36,000-mark.

The broader Topix added 0.72% on the day, and 0.63% for the week.

However, technical indicators continue to point to the Nikkei's 7.47% surge so far in 2024, the best among major global indexes, as 'overheated' even after declines in the last two days.

One common gauge called the relative strength index, or RSI, stands at about 72.6, above the 70 threshold that signals an overbought market.

Foreign investors have been a major driver of this year's rally, with finance ministry data this week showing net equity purchases of more than 1.2 trillion yen ($8.09 billion) in the seven-day period ended Jan. 13.

"That's a very large number for a single week," said James Halse, portfolio manager at Platinum Asset Management in Sydney.

"Interest (in Japanese equities) has been increasing quite consistently over the last year or so, and likely (will increase) further this year with how the market has performed so far."

Chip-related shares were standout performers, tracking overnight gains in U.S. peers after Taiwan Semiconductor Manufacturing (TSMC), the world's largest contract semiconductor maker, projected 2024 revenue growth of more than 20%.

Tokyo Electron and Advantest were the biggest points gainers, contributing more than 100 points each to the Nikkei's total 497-point jump on the day, with respective advances of 6.03% and 8.2%.

($1 = 148.3400 yen) (Reporting by Kevin Buckland; Editing by Sherry Jacob-Phillips and Varun H K)