Tokyo stocks ended at 34-year highs Thursday as exporter issues were boosted by a weakening yen against the U.S. dollar after Bank of Japan Deputy Governor Shinichi Uchida hinted the bank will maintain its accommodative policy stance even after ending negative rates.
The 225-issue Nikkei Stock Average logged the biggest daily rise in nearly three months, ending up 743.36 points, or 2.06 percent, from Wednesday at 36,863.28. The broader Topix index finished 12.68 points, or 0.50 percent, higher at 2,562.63.
The Nikkei and Topix both marked their highest level since February 1990.
On the top-tier Prime Market, gainers were led by transportation equipment, electric appliance and pharmaceutical issues.
The Nikkei briefly rose more than 800 points after Uchida said in a speech earlier in the day that it is "hard to imagine a path" for the central bank to keep raising short-term interest rates even if it decides to end its negative rate policy.
The comment caused the dollar to rise from the 148 yen level seen earlier in the morning.
At 5 p.m., the dollar fetched 148.71-73 yen compared with 148.12-22 yen in New York and 147.82-83 yen in Tokyo at 5 p.m. Wednesday.
The euro was quoted at $1.0780-0781 and 160.32-36 yen against $1.0767-0777 and 159.58-68 yen in New York and $1.0772-0774 and 159.24-28 yen in Tokyo late Wednesday afternoon.
Uchida's comments also led to buying of Japanese government bond, pushing down the yield on the benchmark 10-year bond, which fell 0.010 percentage point from Wednesday's close to 0.695 percent.
His remarks during a meeting with local business leaders in Nara Prefecture had been closely watched in the market, as some investors had expected the BOJ might pursue further rate hikes this year once the bank scraps its negative rate policy, said Shingo Ide, chief equity strategist at the NLI Research Institute.
"Foreign investors bought stock futures as Mr. Uchida's comments eased such concerns," said Ide. But he added that it appears that the market "overreacted" to the comments.
Heavyweight components also contributed to the Nikkei's rise, with SoftBank Group, ahead of its earnings release after the market close, climbing over 11 percent after the U.S.-listed shares of its chip design unit Arm Holdings surged overnight following its robust earnings outlook.
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