The Nikkei stock index closed Wednesday at its highest level in two and a half months, as investors snapped up technology stocks and recently battered shares on expectations of improved earnings due to a weaker yen.
The 225-issue Nikkei Stock Average ended up 493.92 points, or 1.26 percent, from Tuesday at 39,667.07, the highest closing since April 9. The broader Topix index finished 15.58 points, or 0.56 percent, higher at 2,802.95.
On the top-tier Prime Market, gainers were led by electric appliance, service and pharmaceutical issues.
The U.S. dollar was firmer in the upper 159 yen range following a rise in U.S. long-term interest rates, lifted by receding prospects of interest rate cuts after a Federal Reserve official indicated the policy rate is likely to remain unchanged for a while.
But the currency stayed below the 160 yen threshold amid wariness over a possible yen-buying intervention by Japan, dealers said.
Stocks remained strong throughout the day, as a rebound in U.S. chip giant Nvidia prompted investors to snap up Japanese semiconductor and other technology issues, with Advantest ending the day up 7 percent.
Recently battered issues were also sought, as the weakening yen eased excessive concerns about the earnings outlook of major Japanese companies for the fiscal year from April, said Toshikazu Horiuchi, equity strategist at IwaiCosmo Securities Co.
After reaching an all-time high above the 40,000 level multiple times in March, the Nikkei benchmark struggled to sustain the 39,000 mark as earnings forecasts from domestic companies fell short of market expectations, brokers said.
"Investors are now increasingly expecting that upcoming earnings results for the April-June period will not be that bad," Horiuchi added.
