Nintendo Co Ltd soared almost 9% after the video game maker said it plans to launch a new model of its DS handheld game gear that allows users to play 3D games without requiring the use of special glasses.
Japan's Nikkei average hit a two-month intraday high on Wednesday, with tech shares such as Canon climbing after gains in their US peers.
Nintendo Co Ltd soared almost 9% after the video game maker said it plans to launch a new model of its DS handheld game gear that allows users to play 3D games without requiring the use of special glasses.
Market players say Tokyo shares have risen on the back of improvements in corporate earnings and a continuing recovery in the global economy, and the mid-January high of 10,982.10 is seen as the next target.
A rise above that level would take the Nikkei to its highest since October 2008.
"Both corporate earnings and economic conditions are on a recovery trend, and right now we are at a stage when they can be expected to recover further," said Tsutomu Yamada, market analyst kabu.com Securities.
Market players expect companies to forecast sharp improvements in earnings for the 2010-11 financial year that starts in April, when they make their earnings announcements beginning in late April, he said.
The benchmark Nikkei average rose 0.5% to 10,826.38. It rose as high as 10,880.62 earlier, its highest in about two months.
The broader Topix index rose 0.6% to 952.83.
Market players said the government's decision to scale back its privatisation plan for Japan Post and roughly double the limit on Japan Post's deposits and insurance could trigger some outflows of deposits from private banks into Japan Post Bank.
Smaller financial institutions such as regional banks could be more affected than major banks, they said.
But Nana Otsuki, banking sector analyst at UBS, said that while domestic banks are likely to see less money flowing into deposits, the impact on earnings would be limited.
"With loan demand not strong, banks are buying JGBs. So a decrease in deposits is likely to lead to a drop in their JGB holdings, not in lending. In that sense, earnings at banks, in measures like returns on assets, are unlikely to be affected significantly," Otsuki added.
The banking sector sub-index inched up 0.2% and most banking shares rose despite the Japan Post news.
Shares in some major banks dipped, including Mizuho Financial Group, which fell 0.5% to 192 yen and Sumitomo Mitsui Financial Group, which shed 0.4% to 2,952 yen.
Mitsubishi Electric Corp rose 1.1% to 824 yen after the company raised its earnings forecast for the year ending this month to a net profit from a previously expected loss on strong demand for its factory automation equipment and auto components.
Teijin Ltd rose 3.4% to 303 yen after the Nikkei business daily said the synthetic textile maker it is likely to post an annual operating profit of around 18 billion yen ($200 million), beating an earlier prediction of 13 billion yen.
Nintendo Co Ltd jumped 8.9% to 30,450 yen and Canon gained 2.2% to 4,180 yen.
US stocks rallied on Tuesday, led by the tech, industrial and materials sectors, driving the Dow and the S&P 500 to 18-month highs.
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