Japanese stocks rose to a six-week high on Wednesday as bank shares extended recent gains thanks to rising bond yields, while major exporters reaped the rewards of a faltering yen.
Suppliers to Apple Inc also gained after the California-based tech company announced a new lineup of iPhones.
The Nikkei index ended up 0.96 percent at 21,597.76 on Wednesday after earlier rising to 21,619.21, the highest since July 30.
The index has risen for the seventh consecutive session as a global sell-off in bonds lifts yields and hopes for US-China trade negotiations draw money into the stock market.
“There are signs of progress in US-China trade talks, and Treasury yields have started rising, which is totally different from August,” said Hideyuki Ishiguro, senior strategist at Daiwa Securities.
“The rising Treasury yields are triggering a decline in the yen, which is causing people to re-evaluate Japanese shares. People are also re-assessing Japanese banking shares because of the rise in Japanese yields.”
There were 203 advancers on the Nikkei index against 20 decliners.
The largest percentage gainers in the index were Fukuoka Financial Group Inc up 6.67 per cent, followed by Concordia Financial Group gaining 6.33 per cent, and Resona Holdings Inc up by 6.25 per cent.
The broader Topix ended up 1.65 percent at 1,583.66, the highest since July 9.
Japanese mega-bank shares rallied. Mitsubishi UFJ Financial Group Inc ended up 4.43 per cent, Sumitomo Mitsui Financial Group Inc rose 3.14 per cent, and shares in Mizuho Financial Group Inc climbed 1.95 per cent.
Yields on major government bonds have risen sharply recently, which eases the path for Japan’s banks to earn profits on lending.
The focus will shift to the European Central Bank’s policy meeting on Thursday, where policymakers are expected to cut rates but may hold off on using quantitative easing, its strongest tool to ease policy.
Toyota Motor Corp jumped 2.39 per cent, Honda Motor Co climbed 3.74 per cent and Subaru Corp gained 2.26 per cent as a weaker yen boosts exporters’ earnings.
Japan-based Apple suppliers Murata Manufacturing Co rose 2.26 per cent, Alps Alpine Co jumped 3.57 per cent, and Minebea Mitsumi Inc advanced 1.93 per cent.
The largest percentage losses on the Nikkei index were Chugai Pharmaceutical Co down 3.39 per cent, followed by Mitsubishi Estate Co, which lost 1.62 per cent.
The volume of shares traded on the Tokyo Stock Exchange’s main board was 1.15 billion, compared to an average of 1.13 billion yen in the past 30 days.