Japan's Nikkei share average rose on Thursday to end just below 9,600, underpinned by a softer yen which boosted risk appetite, as it headed towards its best February performance in two decades.
Buoyed by a run of strong US economic data, the European Central Bank's liquidity injection of nearly half a trillion euros and further easing steps by the Bank of Japan, the Nikkei has gained 9% this month and 13.5% this year.
Market participants said as the rally had been mainly propelled by foreign investors there was still room for the Nikkei to move higher if others jumped in.
"As long as there are people who continue to be sceptical, there is potential for more fuel for those guys to be squeezed higher or forced to participate in this rally," a trader at a foreign brokerage said.
"It certainly is showing surprising relatively unprecedented resilience in recent memory."
The Nikkei closed 0.4% higher at 9,595.57 after breaking resistance to end above 9,500 in the previous session for the first time since early August. If the Nikkei were to finish the month with the current gains, it would be the best February performance since 1991.
Foreign investors were net buyers of Japanese stocks for the eighth straight week through Feb 18, its largest net buying since the first week of July.
Jun Yunoki, equity strategy analyst at Nomura Securities, said individual investors to step into the market
"Investors who shed stocks in autos, traders, shippers, banks and financials are looking to return to market to buy back (these shares)," he said.
Among big movers, Elpida Memory Inc jumped 12.6% after regulatory filings the previous day showed five Goldman Sachs companies and six Credit Suisse firms had lifted their collective stakes in the Japanese chipmaker.
Goldman Sachs said the increase was for stock lending to clients. Some of the Credit Suisse units said they had lifted their holding for proprietary trading while others said the increase was for stock lending.
Short-selling of Elpida shares has become more difficult as nearly 88% of the stock that is available to be borrowed was already out on loan as of Feb 21, according to securities lending research firm Data Explorers.
Data Explorers numbers show short-selling in Elpida increased to 20.95% of outstanding shares, up from 18.08% on Feb 1.
MAZDA, KDDI fall
Mazda Motor Corp sank 6.8% to a two-week low after announcing a bigger-than-expected share offering of 162.8 billion yen, which would cause a 69% dilution in holdings for existing shareholders.
Shares of the automaker have tumbled more than 15% so far this week.
The earnings outlook for the Topix's transport equipment sector, home to Toyota Motor Corp and Nissan Motor Co , had improved, however.
That compared with minus 6.6% for the broader Topix, down from minus 4.8% in January.
The Topix gained 0.5% to 829.35 on Thursday.
Nearly 2.54 billion shares changed hands on the main board, up from 2.44 billion the previous session.
KDDI Corp lost 2.1% and Nippon Telegraph and telephone Corp dropped 1.1% after Nomrua downgraded both telecom firms to "neutral" from "buy".
The brokerage kept its "buy" rating on Softbank Corp, which gained 0.7%.
