Japan's Nikkei average jumped 3.3 per cent to reach its highest close since early January today as Mitsubishi UFJ Financial Group and other banks soared on hopes for an upturn in the US banking sector, while a weaker yen lifted exporters.
But some market analysts said the Nikkei appeared to have overheated after ending today about 13 per cent above its 25-day moving average. The average is up 20 per cent from a 26-year closing low hit on March 10th.
US stocks leapt about 7 per cent yesterday after Washington gave details of its plan to purge toxic assets from bank balance sheets, fuelling optimism about a revival in bank lending and driving double-digit gains in US financial shares.
The benchmark Nikkei ended up 272.77 points at 8,488.30, its highest close since January 9th.
Although some said the average has climbed too fast, other traders said the market may receive support in the near-term as institutional investors such as pension funds are likely to buy to prop up stock prices as the fiscal year-end approaches.
Many Japanese firms close their books on March 31st.
Share prices also got help from Finance minister Kaoru Yosano, who said today that the government would extend its ban on naked short-selling of stocks and would extend rules on company share buybacks until the end of July in view of current Japanese stock market conditions.
The Dow Jones industrial average jumped 6.8 per cent yesterday, also helped by an unexpected rise in housing sales, seen as a key factor in spurring an economic recovery.
Tokyo's broader Topix added 2.7 per cent to 812.72.
Trade was active on the Tokyo exchange's first section, with 2.6 billion shares changing hands, compared with last week's daily average of 2.2 billion.
Advancing stocks outnumbered declining ones by nearly 5 to 1.
Nippon Steelclimbed 2.6 per cent to 276 yen after a company official said the firm had sealed a price cut of about 57 per cent on coking coal contracts with BHP Billiton Mitsubishi Alliance for fiscal 2009/10.
Shares of Mitsubishi UFJ Financial Group, Japan's top lender, jumped 4.5 per cent to 535 yen.
No.2 Mizuho Financial Group rose 5.0 per cent to 231 yen and Sumitomo Mitsui Financial Group, the third-ranked bank, gained 3.2 per cent to 3,920 yen.
Exporters gained as the yen tumbled today against other currencies. Investors welcome a weaker yen as it boosts exporters' profits when repatriated.
Canon jumped 4.4 per cent to 2,880 yen, while Toyota advanced 3.6 per cent to 3,160 yen, even after a newspaper reported that weaker-than-expected sales had prompted the automaker to revise down its production plans in Japan in May.
Shares of machine tool maker Mori Seiki added 7.8 per cent to 1,012 yen a day after Gildemeister, the world's biggest maker of cutting machine tools, said it had forged an alliance with Mori Seiki to help it weather the worldwide economic slump.
Reuters