Japan's Nikkei benchmark climbed 2.4 per cent to hit a two-month closing high today as Canon Inc and other exporters gained on a softer yen, leading to a sixth straight positive week, while Japanese government bond futures plunged.
JGB futures tumbled so sharply that the fall led to their first-ever 15-minute trading halt by the Tokyo Stock Exchange, as investors began turning their sights towards next week's US Federal Reserve board meeting on a growing sense that any rate cuts then may be the last for a while.
Mizuho Financial Group and other financials surged on growing confidence in their New York peers, also helping to boost the Nikkei.
Rising inflation pressures, an expected pause in the Fed's aggressive run of rate cuts and speculation about a European Central Bank rate increase have caught bond investors around the world off guard this week, leading to one of the worst Japanese government bond sell-offs in the last decade.
Investors stayed to the sidelines before a flood of Japanese earnings results including those of automaker Honda Motor Co Ltd and electronics group Toshiba - both due after the close - and this exaggerated moves.
"What we saw happen is that a lot of players were forced into short-covering as the market rose, since nobody thought it would gain this much," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.
"The yen's softening set up the base for the market to start rising, and after that the short-covering simply took it higher."
The Nikkei gained 322.60 points to 13,863.47, its highest close since February 28th. The broader TOPIX was up 2.5 per cent at 1,339.91.