The Nikkei index jumped 2.1 per cent yesterday, led by banks and exporters as the yen softened after Japan escaped direct criticism of its aggressive monetary easing at the weekend's G20 meeting of leading industrialised and emerging economies.
The Nikkei added 234.04 points to 11,407.87, closing in on the four-year high of 11,498.42 it struck on February 6.
A statement issued by the Group of 20 policymakers did not single out Japan, though it said members should refrain from competitive devaluations and that monetary policy should be directed only at price stability and growth.
Investors took the G20's statement as a signal to continue the one-way bets against the yen that paused last week before the meeting. Yesterday, the yen was trading at 94.15 to the US dollar just above a 33-month low of 94.465 struck one week earlier.
Exporters rose, with Fanuc gaining 2.1 per cent and Toshiba 2.5 per cent.
"At the G20 meeting, there wasn't as much criticism from emerging countries about the recent yen's weakness as feared. That spurred yen selling," said Kyoya Okazawa, the head of global equities at BNP Paribas.
Shares in the financial and property sectors contributed to the benchmark's gains as investors took the absence of G20 criticism of Japan's reflationary policies as a sign these can be pursued without sparking friction.
The country's top three banks were among the six most-traded stocks. Mitsubishi UFJ Financial surged 4.9 per cent, while Mizuho Financial and Sumitomo Mitsui Financial added 5 and 4.1 per cent respectively. The banking sub-index was the best-performing sector on the main board, rising 4.8 per cent.
"We see scope for further share price gains over the next months," Natsumu Tsujino, a banking analyst at JPMorgan, wrote in a report.