Tokyo stocks ended higher Monday, with the Topix index closing at a 34-year high, lifted by strong financial issues as higher long-term interest rates raised hopes for improved profits.
The 225-issue Nikkei Stock Average ended up 47.98 points, or 0.12 percent, from Friday at 39,631.06. The broader Topix index finished 14.65 points, or 0.52 percent, higher at 2,824.28, its highest close since Jan. 8, 1990.
On the top-tier Prime Market, gainers were led by marine transportation, insurance and bank issues.
The U.S. dollar moved narrowly, mostly in the upper 160 yen range, amid vigilance about a possible yen-buying intervention by Japanese authorities in response to the yen's rapid depreciation, dealers said.
Stocks were initially supported by the Bank of Japan's June Tankan survey that showed business sentiment among major manufacturers improved to a better-than-expected 13 from 11 three months earlier.
The survey also said small- to large-sized companies in all industries projected higher inflation in the three and five years ahead compared with the previous survey, raising speculation that the BOJ will raise interest rates soon, brokers said.
Such expectations lifted long-term interest rates and boosted bank and other financial issues, they said.
Meanwhile, the Nikkei pared gains and briefly entered negative territory as investors digested the survey results, which also showed a downward revision of the net profit earnings outlook, brokers said.
"Investors locked in gains after the Nikkei index approached the 40,000 threshold," amid concerns over earnings outlook from domestic companies, said Yutaka Miura, senior technical analyst at Mizuho Securities Co.
