By Ayai Tomisawa
TOKYO (Reuters) - The Nikkei average jumped 3.6 percent on Tuesday to break above 14,000 for the first time in nearly five years, with exporters leading the gains after last week's strong U.S. jobs data eased concerns over the health of Japan's major export market.
The Nikkei gained 486.20 points to 14,180.24, its highest closing level since June 2008. Markets were closed in Japan for public holidays on Friday and Monday.
Tuesday's rally took the benchmark above 13,988, the 61.8 percent retracement of its slide from February 2007 to October 2008.
Exporters were notable gainers, with Sony Corp advancing 6.4 percent, Toyota Motor Corp rising 4.9 percent, and semiconductor equipment maker Tokyo Electron Ltd gaining 6.8 percent.
Sony was the most traded stock on the main board by turnover, while Toyota took second spot.
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The broader Topix rose 3.1 percent to 1,188.57, with 3.18 billion shares changing hands, compared to last month's average daily volume of 4.31 billion shares.
"People had sold and shorted Japanese stocks before the Golden Week holidays as they wanted to take profits before the U.S. jobs data was out," said Kyoya Okazawa, head of global equities and commodity derivatives at BNP Paribas.
"Strong U.S. jobs data lifted sentiment."
The stronger-than-expected U.S. payrolls report on Friday reignited investor confidence after weak economic data from the euro zone and China had fueled concerns over the global growth outlook.
"Aside from the U.S. market, there is no other cash market they are interested in getting into besides the Japanese market," Okazawa said.
The United States is Japan's biggest export market, followed closely by China.
WEAK YEN TREND
Investor sentiment was also helped by renewed weakness in the yen, which fell as low as 99.46 on Monday on the back of the U.S. job data. The yen last traded at 98.97 yen to the dollar.
The Japanese currency has weakened 23 percent against the dollar since mid-November while the Nikkei has jumped 64 percent after Prime Minister Shinzo Abe began promising to revive the economy with expansionary monetary and fiscal policies, dubbed as "Abenomics", during his election campaign.
The yen's declines gathered fresh momentum after the Bank of Japan's April 4 announcement of a radical monetary expansion campaign to end two decades of economic stagnation.
But market participants said that there have been worries that Japan may face further criticism from its global trade competitors that its aggressive monetary easing caused the yen to weaken.
"As soon as people think the weak yen trend is led by the strong dollar on the back of the improving U.S. economy and not by Japan's monetary easing, investors will be relieved and the Nikkei will probably gain further," said Hikaru Sato, a senior technical analyst at Daiwa Securities.
"Till then, the market may be swayed by U.S. economic indicators such as retail sales, and depending on the outcome, investors may take profits."
He added that investors are also focused on Japanese corporate earnings, and companies that disappoint the market took hit a hit on Tuesday.
Idemitsu Kosan Co Ltd fell 1.2 percent after the oil refiner said its operating profit fell 20 percent on the year to 110.7 billion yen in the fiscal year ended March 31, due to reduced refining margin.
McDonald's Holdings Co shed 2.0 percent after the company said its operating profit for Jan-March declined 53.3 percent on year to 3.37 billion yen, hit by rising raw material costs due to the weakening yen.
Of the 65 Nikkei companies that have reported quarterly earnings so far, 54 percent of them either beat or met market expectations, according to Thomson Reuters StarMine.
(Additional reporting by Dominic Lau and Tomo Uetake; Editing by Kim Coghill)