The Nikkei index recorded its highest point gain since June 2020 after briefly surging by more than 1,000 points on Thursday, as investors welcomed an overnight drop in crude oil futures that had been climbing amid the Ukraine crisis.
The 225-issue Nikkei Stock Average ended up 972.87 points, or 3.94 percent, from Wednesday at 25,690.40. The broader Topix index of all First Section issues on the Tokyo Stock Exchange finished 71.14 points, or 4.04 percent, higher at 1,830.03.
Every industry category gained ground, led by marine transportation, air transportation and consumer credit issues.
Stocks shot up from the outset as concern over elevated oil prices receded following reports that the Organization of the Petroleum Exporting Countries and its allies may raise production targets, easing worries over the adverse impact on the global economy.
The Nikkei index briefly jumped 1,002.78 points, or over 4 percent, closing with its biggest point gain since June 16, 2020.
Other commodity futures tracked the fall in crude oil, further alleviating worries over soaring inflation and its adverse effect on corporate earnings, analysts said.
"A temporary lull in the upward trend of crude oil futures eased fears over soaring inflation, while an overnight rally on Wall Street also prompted investors to buy back shares," said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co.
Market participants sought a wide range of shares in active trading, scooping up battered stocks after the benchmark Nikkei lost over 1,800 points over the past four trading days on persistent uncertainty over Moscow's invasion of Ukraine, analysts said.
Sentiment was also improved by significant gains in Chinese equities markets, Ichikawa added.
However, markets are expected to remain volatile, with investors focused on talks between Russia and Ukraine later in the day amid Moscow's ongoing offensive, analysts said.
On the First Section, advancing issues outnumbered decliners 2,140 to 30, while 10 ended unchanged.
Air transportation issues soared as falling oil futures raised hopes that damage to the sector would be curbed.
ANA Holdings jumped 120.5 yen, or 5.5 percent, to 2,319.0 yen and Japan Airlines surged 126 yen, or 6.7 percent, to 1,996 yen.
Export-oriented issues rose following the yen's weakening against the U.S. dollar. Electronic components manufacturers TDK gained 145 yen, or 3.9 percent, to 3,890 yen and Kyocera advanced 242 yen, or 4.0 percent, to 6,318 yen.
Trading volume on the main section rose to 1,504.03 million shares from Wednesday's 1,500.51 million shares.
In the foreign exchange market, the U.S. dollar remained firm in the upper 115 yen range in late afternoon trading on stronger U.S. stocks, dealers said.
At 5 p.m., the dollar fetched 115.92-94 yen compared with 115.79-89 yen in New York and 115.88-89 yen in Tokyo at 5 p.m. Wednesday.
The euro was quoted at $1.1064-1066 and 128.26-30 yen against $1.1072-1082 and 128.11-21 yen in New York and $1.0916-0918 and 126.50-54 yen in Tokyo late Wednesday afternoon.
The yield on the benchmark 10-year Japanese government bond rose 0.025 percentage point from Wednesday's close to 0.185 percent, as investors sold the safe-haven debt as risk appetite declined following the surge in Tokyo stocks. Bond yields move inversely to prices.
