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By Ayai Tomisawa
TOKYO, May 18 (Reuters) - Japan's Nikkei share average rose to a 3-1/2-month high on Friday and scored its eighth straight weekly gain after a weaker yen lifted exporters, while financial stocks extended their rally as U.S. bond yields remained high.
The Nikkei gained 0.4 percent to 22,930.36, the highest closing level since Feb 2. The benchmark index rose 0.8 percent on a weekly basis to mark the eighth straight weekly gains, the longest winning streak since a nine-week stretch between September and November.
The dollar rose to its strongest level since Jan. 23 against the yen, hitting 111.00 earlier.
But analysts said that Friday's thin trade and minimal gains suggest the rally may pause.
"Japanese shares have risen on a weaker yen, but I doubt that they keep rising from here just because of the dollar-yen levels," said Shogo Maekawa, global market strategist at JPMorgan Asset Management.
"When you look at global shares, gains in U.S. stocks and emerging market shares have stalled. It is unlikely that Japanese stocks will outperform their global peers."
Trading was thin, with only 1.3 billion shares changing hands on the main board, the lowest level since early April.
The broader Topix gained 0.4 percent to 1,815.25.
Market players also remain nervous about U.S.-China trade tensions after U.S. President Donald Trump said the world's second largest economy had "become very spoiled on trade".
The weaker yen helped exporters with TDK Corp surging 2.9 percent, Nissan Motor rising 0.8 percent and Honda Motor soaring 1.3 percent.
Financials such as insurers advanced, with T&D Holdings up 2.3 percent and Dai-ichi Life Holdings adding 1.2 percent, after U.S. 10-year Treasury yields rose to a near seven-year peak on Thursday, extending this week's bond market selloff.
Elsewhere, PeptiDream jumped 3.0 percent after the pharmaceutical research company said that it completed the transfer of its proprietary peptide discovery technology to Shionogi & Co Ltd.
(Editing by Shri Navaratnam)