Tokyo stocks advanced Monday, as signs of cooling U.S. inflation raised hopes for an interest rate cut by the Federal Reserve at an early date and eased concerns about the prospects of the world's largest economy.
The 225-issue Nikkei Stock Average ended up 435.13 points, or 1.13 percent, from Friday at 38,923.03. The broader Topix index finished 25.58 points, or 0.92 percent, higher at 2,798.07.
On the top-tier Prime Market, gainers were led by securities house, insurance and marine transportation issues.
The U.S. dollar was little changed mostly in the lower 157 yen zone amid caution about a yen-buying intervention by Japanese authorities after the government said Friday it had spent a monthly record of 9.8 trillion yen between April and May to slow the yen's rapid fall, dealers said.
The Nikkei stock index briefly jumped over 500 points after U.S. data showed Friday the year-on-year inflation index in April was unchanged from the previous month, matching market expectations and fueling hopes for an interest rate cut by the Fed as early as September, brokers said.
Financial issues were notably bought as the recent trend of rising Japanese long-term interest rates raised hopes of an improvement in their profits, brokers said.
"Expectations have been growing that the Bank of Japan could signal it will further reduce government bond purchases or increase interest rates ahead of its policy meeting next week," said Toshikazu Horiuchi, equity strategist at IwaiCosmo Securities Co.
