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Across-the-board buying underpinned the benchmark index, with 32 of 33 subsectors rising, while exporters and real estate stocks outperformed the overall market.
The Nikkei rose 1.4% to 11,845.04, the highest level since September 2008.
China's pledge of record government spending to boost growth and upbeat US service sector data drove the Dow up 0.89% to a record-closing high at 14,253.77 points, surpassing the peak seen in 2007.
Sharp Corp soared 18% to a one-month high of 356 yen after three sources familiar with the matter told Reuters that South Korea's Samsung Electronics Co Ltd is set to invest about $110 million in the struggling firm, a deal that will ensure it a smooth supply of large-sized TV panels and help bolster the Japanese company's chances of survival.
Exporters were stronger, with Toyota Motor Corp rising 2.0% and Sony Corp gaining 1.5%.
"Investors may chase the market higher to 11,800, but it may be difficult to hold above that level until the close," said Yoshiyuki Kondo, an analyst at Daiwa Securities.
The broader Topix gained 1.2% to 1,000.05. It was the first time since April 2010 that it had climbed above the 1,000-line due mainly to buying in domestic-demand sensitive shares such as real estate stocks.
The Nikkei has gained 14% this year, outperforming its global peers on the back of a weaker yen mainly driven by Prime Minister Shinzo Abe's bold reflationary policies aimed at reigniting the economy.
The Dow has added 8.8%, the Standard & Poor's 500 Index has gained 8.0% while the pan-European FTSEurofirst 300 index has advanced 4.9% over the same period.
Analysts said domestic-demand focused stocks such as department stores will likely continue to attract buying due to recent strength in sales of luxury items. Hopes that Abe's reflationary policies will be effective are expected to lift asset-related shares including warehouses and railroad stocks.
"Until January, exporters led the Japanese market's gains, but people's interest is shifting to domestic-demand shares lately," said Yutaka Yoshino, chief technical analyst at SMBC Nikko Securities.
On Wednesday, the real estate subsector was the best sectoral performer, with Mitsui Fudosan Co gaining 2.7%, Mitsubishi Estate Co adding 2.0% and Sumitomo Realty & Development Co soaring 3.2%.
