Japan's benchmark Nikkei index closed at its highest level in around 34 years on Tuesday, as investors bought up technology stocks tracking gains among their U.S. counterparts.
The 225-issue Nikkei Stock Average ended up 385.76 points, or 1.16 percent, from Friday at 33,763.18, its highest close since March 9, 1990, when Japan was experiencing an asset price bubble. Japanese financial markets were closed Monday due to a public holiday.
The broader Topix index finished 19.55 points, or 0.82 percent, higher at 2,413.09.
On the top-tier Prime Market, gainers were led by machinery, precision instrument and metal product issues.
The U.S. dollar briefly weakened to the mid-143 yen range in Tokyo. The currency was sold on prospects of a narrower interest rate differential between Japan and the United States, after long-term Treasury yields fell on news from the Federal Reserve Bank of New York that consumer inflation expectations are at their lowest level in three years.
At 5 p.m., the dollar fetched 144.06-07 yen compared with 144.17-27 yen in New York at 5 p.m. Monday.
The euro was quoted at $1.0956-0957 and 157.84-88 yen against $1.0945-0955 and 157.86-96 yen in New York late Monday afternoon.
The yield on the benchmark 10-year Japanese government bond dipped 0.020 percentage point from Friday's close to 0.580 percent, tracking an overnight fall in long-term U.S. Treasury yields.
Tokyo stocks rose sharply, with the Nikkei initially climbing over 600 points in the morning session and close to 34,000 on buying of technology-related issues tracking gains in their U.S. counterparts.
Analysts said gains were supported by a risk-on mood in the first Tokyo trading day after Wall Street's muted response to Friday's December non-farm payroll report, which came in firmer than market expectations to cloud the outlook on when the Fed could start cutting rates.
"Market participants were relieved by (stock market) rises in the United States on Monday following the employment data, which led to buying in Japan of technology and heavyweight companies, driving gains today," said Kazuo Kamitani, strategist in the Investment Content Department of Nomura Securities Co.
Gains were trimmed slightly in the afternoon from their early highs, however, as some participants moved to lock in gains and the yen's strengthening trend in Tokyo fueled concerns over exporters' profits when repatriating overseas earnings, analysts said.
Heavyweight chip-related firms led gains, with Tokyo Electron up 790 yen, or 3.3 percent, at 24,910 yen and Advantest ahead 282 yen, or 6.0 percent, at 4,945 yen.
Elsewhere, mobile game developer DeNA jumped 126.5 yen, or 9.1 percent, to 1,511.5 yen, on news Friday that its affiliate Go Inc., which operates a taxi-hailing app, has begun preparations for a public listing.
Bucking the trend, Hokuriku Electric Power fell 29.3 yen, or 3.9 percent, to 727.8 yen, after two power generation units at its thermal plant in Ishikawa Prefecture were damaged in the powerful earthquake that struck Ishikawa and other prefectures on New Year's Day.
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