Japan's Nikkei share average jumped 2.1 per cent on Monday, led by banks and exporters as the yen softened after Japan escaped direct criticism of its aggressive monetary easing at the weekend's G20 meeting.
The Nikkei added 234 points to 11,408, close to the 4-year high of 11,498 it struck on February 6.
A statement issued by Group of 20 policymakers 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 G20's statement as a signal to continue the one-way bets against the yen that paused last week before the meeting. On Monday, the yen was trading at 94.15 to the dollar just above a 33-month low of 94.465 struck one week earlier.
Exporters rose, with Fanuc Corp gaining 2.1 per cent and Toshiba Corp 2.5 per cent.
"At the G20 meeting, there wasn't as much criticism from emerging countries about the recent yen's weakness as feared. That spurred yen selling," said Kyoya Okazawa, head of global equities at BNP Paribas.
Shares of the financial and real estate sectors contributed to the benchmark's gains as investors took the absence of G20 criticism of Japan's reflationary policies as a sign these can be pursued without sparking friction.
Japan's top three banks were among the six most-traded stocks. Mitsubishi UFJ Financial Group Inc surged 4.9 per cent, while Mizuho Financial Group Inc and Sumitomo Mitsui Financial Group Inc added 5.0 and 4.1 per cent respectively. The banking sub-index was the best-performing sector on the main board, rising 4.8 per cent.
"We expect investor interest in Japanese stocks to rise further as the BOJ governor appointment and BOJ's next steps become clearer, and more details emerge of deregulation and other proposals by the Abe administration. We see scope for further share price gains over the next months," Natsumu Tsujino, banking analyst at JPMorgan, wrote in a report.
The real estate sub-index was the third best, advancing 3.8 per cent. Mitsubishi Estate Co Ltd gained 4.0 per cent and Mitsui Fudosan 3.8 per cent.
The broader Topix rose 2.2 per cent to 962.69, in slightly thinner trade, with 3.13 billion shares changing hands.
More upside seen
Yen weakness has helped the Nikkei benchmark gain about 32 per cent 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.
Nomura Securities, which said that its end-2013 target for the Nikkei remains 12,500, sees 11,800 as a potential near-term target if the dollar trades above 95 to the yen.
Under the current Abenomics-driven market, investors have focused on large-cap and high-risk stocks, but with stock selection becoming increasingly important, return-on-equity will remain a key investment indicator, Nomura said.
It said trading companies offer high ROE and low valuations, and Nomura also is upbeat on machine tool makers and department store operators.
