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The Nikkei added 254.32 points to 11,429.15, with financials and real estate contributing to the benchmark's gains as investors bet that the G20's apparent approval of Japan's reflationary policies will help spur economic recovery.
The benchmark is now just 0.6% away from the 33-month high it struck on February 6 of 11,498,42.
Japan's top three banks were among the six most-traded stocks. Mitsubishi UFJ Financial Group Inc led the gains, jumping 5.3%, while Mizuho Financial Group Inc and Sumitomo Mitsui Financial Group Inc were close behind, putting on 4.1 and 4.8%, respectively.
The real estate sector was the second best-performing sub-index, advancing 3.4%. Tokyo Tatemono Co Ltd added 2.4% after JP Morgan said it saw its profits improving in the next fiscal year, while Tokyu Land Corp gained 2.5%.
A statement issued by G20 policymakers at the weekend did not single out Japan, though it said members should refrain from competitive devaluations and that monetary policy should be directed only at price stability and growth.
Investors took the statement as a signal to continue the one-way bets against the yen that paused last week before the meeting. By mid-morning, the yen was trading at 94 to the dollar just above a 33-month low of 94.465 struck last Monday.
"There is not much else to go on today except the currency, so everything depends on where the yen goes," said Toshiyuki Kanayama, senior market analyst at Monex.
The broader Topix rose 2.2% to 962.48.
Yen weakness has helped the benchmark gain about 30% since mid-November, when Shinzo Abe, then leader of the opposition and now prime minister, began calling for bolder fiscal and monetary policy to pull Japan out of deflation.
Shares of carmakers, whose overseas revenues will be swollen by a softer yen, advanced in heavy trade. Toyota Motor Corp added 2.7%, while Honda Motor Co Ltd gained 2.8%.
Losing the game?
Online game platform operator DeNA Co Ltd shed 6.3% after the Nikkei business daily mentioned its disappointing foray into overseas markets when it revealed games makers Capcom Co Ltd and Konami Corp are aiming to expand abroad.
"The foreign market has not been good for DeNa, which also only gets a small cut as a games platform rather than a maker," said Yasuo Sakuma, portfolio manager of Bayview Asset Management.
"There are no gross expectations for DeNA now. The rules of the games industry have changed - the old winners are now losers."
Capcom dropped 0.2% while Konami gained 0.7% on the news on Monday morning.
By contrast, Sakuma singled out shares of Gungho Online Entertainment Inc, which have jumped more than tenfold since last July due to the popularity of its Puzzles and Dragons games. Gungho's shares were up 16.5% on Monday morning.
