The Nikkei stock index ended Wednesday at its highest level in more than two months, surging 3 percent as exporter issues advanced after the U.S. dollar rose above the 121 yen line for the first time in over six years.

The 225-issue Nikkei Stock Average ended up 816.05 points, or 3.00 percent, from Tuesday at 28,040.16, its highest level since Jan. 18. The broader Topix index of all First Section issues on the Tokyo Stock Exchange finished 44.96 points, or 2.33 percent, higher at 1,978.70.

Almost all industry categories gained ground, led by electric appliance and transportation equipment issues.

The dollar remained firm after crossing the 121 yen line for the first time since February 2016 on Tuesday night. Dealers said it rose on expectations the interest rate gap between the United States and Japan will widen as the Federal Reserve has hinted at more aggressive interest rate hikes to tackle inflation.

At 5 p.m., the dollar fetched 121.06-07 yen compared with 120.76-86 yen in New York and 120.47-48 yen in Tokyo at 5 p.m. Tuesday.

The euro was quoted at $1.1017-1018 and 133.37-41 yen against $1.1026-1036 and 133.21-31 yen in New York and $1.0983-0984 and 132.32-36 yen in Tokyo late Tuesday afternoon.

The yield on the benchmark 10-year Japanese government bond inched up 0.005 percentage point from Tuesday's close to 0.220 percent, its highest level in about a month, tracking a rise in U.S. Treasury yields on expectations the Fed will accelerate its rate hikes.

The Nikkei index shot higher from the outset, tracking overnight advances on Wall Street and a weaker yen. It extended gains in the afternoon, edging up past the 28,000 mark on strong U.S. stock futures as the benchmark logged a seven-day winning streak, the first time since September 2021.

"Export-oriented shares were boosted throughout the day by the weak yen, although the (U.S. dollar's ascent against the Japanese currency) may also negatively impact Japan's economic growth due to inflated import costs," said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co.

A weaker yen enables exporters to earn more if they repatriate overseas profits.

Ichikawa added that although Russia and Ukraine have yet to reach an agreement in cease-fire negotiations, the fact that talks are ongoing have raised cautious hopes that the crisis will not be drawn out.

On the First Section, advancing issues outnumbered decliners 1,940 to 206, while 35 ended unchanged.

Automakers were among the export-related shares that gained from the weaker yen, with Toyota Motor adding 82.0 yen, or 4.0 percent, to 2,137.0 yen, while Nissan Motor climbed 19.6 yen, or 3.8 percent, to 534.8 yen.

High-tech issues also rose after the technology-heavy U.S. Nasdaq index climbed nearly 2 percent.

TDK surged 230 yen, or 5.6 percent, to 4,320 yen, and Fanuc was up 640 yen, or 3.0 percent, at 21,980 yen.

SoftBank Group, a Nikkei heavyweight that invests in many Chinese tech companies, jumped 365 yen, or 7.2 percent, to 5,421 yen, as sentiment improved following gains in Hong Kong's Hang Seng index, analysts said.

Mizuho Financial Group advanced 26.0 yen, or 1.6 percent, to 1,654.5 yen, after the firm said Wednesday it had entered into a strategic collaboration with tech giant Google LLC to accelerate the Japanese company's digital transformation.

Trading volume on the main section fell to 1,414.73 million shares from Tuesday's 1,533.23 million.

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