 "Nikkei rises above 12,000, first time in 4-1/2 years")
The Nikkei rose 1.1% to 12,060.96 by mid-morning, its highest level since September 2008.
Exporters led the gains as the dollar hit a one-week high against the yen after a report showed US private-sector employers added a larger-than-expected 1,98,000 jobs in February.
"Foreign investors are main buyers of exporters," said Tetsuro Ii, the chief executive of Commons Asset Management.
"Exporters have gained sharply recently and they have become expensive," he said but added that these valuations will likely be justified when their earnings recover on the back of a weaker yen.
The Nikkei has gained about 16% this year, outperforming its global peers as the yen had declined sharply weakened on calls by new Prime Minister Shinzo Abe for aggressive easing..
By comparison, the Dow has added 9.1%, the Standard & Poor's 500 Index has gained 8.1% while the pan-European FTSEurofirst 300 index has advanced 4.6% over the same period.
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On Thursday, the Bank of Japan is likely to keep monetary policy unchanged, holding fire for new leaders who are expected adopt bolder measures to end nearly 20 years of mild deflation.
The two-day meeting that started on Wednesday is the last for Governor Masaaki Shirakawa and his two deputies before they leave on March 19.
Among exporters, Honda Motor Co gained 1.4%, Mazda Motor Corp rose 3.9% and Nikon Corp added 1.6%.
But Sharp Corp gave up some of the sharp gains it made a day earlier after sources said South Korea's Samsung Electronics Co Ltd is set to invest about $110 million in the struggling firm. The news was later confirmed by the company.
The stock fell 4.1% after gaining 14% on Wednesday.
Wall Street mostly edged higher on Wednesday, with the Dow hitting another record, helped by the private payroll survey that bodes well for the monthly jobs report due on Friday.