)
The Nikkei rose 0.3% to 12,273.78 after hitting a 54-month intraday high of 12,461 on Tuesday.
"Overseas clients are very bullish. We could see consolidation at this level right now as the FX trade is priced in but we are still at 96 (yen to the dollar)," a Tokyo-based trader said.
"It's up to the corporate sector to deliver (growth)," he said, adding that upbeat company earnings guidance for the next fiscal year starting in April could be the next catalyst to drive the market higher.
Exporters rebounding included Nikon Corp, Canon Inc and Daikin Industries, up between 0.4 and 4.3%.
But Seiko Epson Corp sank 4.6% after the printer maker cut its full-year dividend outlook for the business year ending March, citing weaker sales.
Nintendo Co shed 3.7% after a US federal jury in New York found the video game company infringed an inventor's 3D display technology patent with its handheld 3DS videogame system.
The broader Topix index dipped 0.1% to 1,030.31.
Another trader said many investors hugged the sidelines ahead of the confirmation of Haruhiko Kuroda, an advocate of aggressive monetary easing, as the central bank governor this week. Parliament is widely expected on Friday to approve the appointments of Kuroda as well as Kikuo Iwata and Hiroshi Nakaso as his deputies.
The benchmark Nikkei has rallied more than 41% since mid-November, bolstered by a weaker yen after Prime Minister Shinzo Abe pursued bold reflationary policies to reignite the economy.
Betting on Abe's push to drive the yen lower and drag the economy out of deflation, foreign investors were net buyers of Japanese equities for the 17th straight week, the longest such run since early 2006 when reformer Junichiro Koizumi was the prime minister.
Foreign investors bought 1.12 trillion yen in the week through March 9, their largest net buying since the Ministry of Finance began collecting the data in 2005. They bought a total of 5.36 trillion yen in the past 17 weeks, versus 5.80 trillion in their 19 straight weeks of net buying during the Koizumi era.
But some foreign investors were sceptical of Abe's policy.
"Many investors have hurriedly moved from light to neutral in their allocations to Japanese equities and are debating the approach to real estate and bonds," said Andrew Milligan, head of global strategy at Standard Life Investments.
"We would still caution with 'caveat emptor'. Japan has seen a long series of attempts to turn the economy around. Historically, it has been right to doubt just how sustained any Japanese policy initiatives will prove to be," Milligan said.
Japanese equities carry a 12-month forward price-to-earnings ratio of 13.5 after steadily climbing from a near four-year trough of 10.4 in June last year, though it is still below its 10-year average of 16.3, data from Thomson Reuters Datastream showed.
