TOKYO The Nikkei share average climbed 2.1 percent to a near five-year high on Monday, with exporters taking the lead as the yen weakened after the Group of 20 economies stopped short of criticizing Japan's sweeping monetary expansionary policies.
The Nikkei .N225 was up 286.59 points at 13,603.07 after trading as high as 13,611.58, its highest since June 2008.
Exporters charged higher as the dollar firmed against the yen to within a whisker of 100 after the G20 refrained from singling out Tokyo's reflationary policies as some in the markets had feared.
In a communiqué after a two-day meeting, the G20 simply said it would be "mindful" of possible side effects from extended periods of monetary stimulus.
"I worried that the G20 countries would criticize Japan's easing monetary policies," said Ryota Sakagami, chief strategist at SMBC Nikko Securities.
"The market uptrend will continue ... I think sooner or later the Nikkei will reach 14,000. For the moment, the one concern is still the weak global economy, especially the weak U.S. macroeconomic indicators."
Sakagami said domestic-focused companies were likely to outperform exporters in the next few months, although the yen's weakness has lifted the appeal of export-driven firms on Monday.
Major exporters Toyota Motor Corp (7203.T), Honda Motor Co (7267.T), Canon Inc (7751.T) and TDK Corp (6762.T) were up between 2.7 and 3.1 percent.
Mitsui Engineering & Shipbuilding Co Ltd (7003.T) jumped as much as 20.7 percent to a near two-year high on Monday after the Nikkei newspaper said Mitsui and Kawasaki Heavy Industries Ltd (7012.T) were set to begin merger talks.
Shares of Kawasaki Heavy gained 1.8 percent.
The Bank of Japan on April 4 stunned financial markets by announcing a sweeping monetary expansion program aimed at breaking a deflationary cycle and ending two decades of stagnation, promising to inject $1.4 trillion into the world's third-largest economy in less than two years.
Financials, which are expected to benefit from the reflationary drive, were also in demand, with Nomura Holdings (8604.T), Japan's top brokerage, up 3.4percent and Mitsubishi UFJ Financial Group (8306.T) adding 3 percent.
The benchmark Nikkei has rallied 57 percent and the yen has weakened 24 percent against the dollar since mid-November, when Shinzo Abe, who became Prime Minister in December, promised bold monetary and fiscal expansionary policies during his election campaign.
In terms of valuations, Japanese equities carry a 12-month forward price-to-earnings ratio of 14.7, a level not seen since June 2010 but still below its 10-year average of 16.4, according to Thomson Reuters Datastream.
The broader Topix .TOPX index advanced 2.3 percent to 1,153.02.
(Editing by Shri Navaratnam)