Tokyo's Nikkei soars 2pc to close at two-year high

TOKYO: Tokyo's benchmark Nikkei index on Tuesday climbed nearly two percent to close at its highest level in more than two years, rising past the psychologically important 20,000 mark.

The Nikkei 225 index rose 1.96 percent, or 389.88 points, to end at 20,299.38, its highest since August 2015, after a weaker yen lifted exporters.

The broader Topix index rose 1.77 percent, or 28.94 points, to end the session at 1,667.88.

"Share prices rallied as concerns over North Korea, the US economy and a higher yen receded," said Masayuki Kubota, chief strategist at Rakuten Securities, in a client note.

Traders were also eyeing the possibility of a snap election, reportedly as soon as next month.

"If we have a snap election, that would be another key (market-moving) factor in addition to forex and North Korea," Kubota said.

In particular, foreign investors "are sensitive to Japanese politics and have actively traded in times of snap elections," he said.

Japanese shares may slip if Prime Minister Shinzo Abe's "support rate fails to recover (further), which may disappoint foreign investors", he said.

One of the best-performing stocks on the Tokyo market was Nintendo, which jumped more than seven percent on strong sales prospects for its Switch games console.

Japanese carmakers were lifted by the weaker yen, with Toyota rising 3.84 percent to 6,729 yen and Nissan up 2.12 percent at 1,153 yen.

The dollar traded at 111.76 yen, sharply up from 110.43 yen in Tokyo Friday before the market closed for a three-day weekend, as investors bet on rises in US interest rates.

Tokyo was following Wall Street higher, as US stocks logged fresh records in advance of this week's meeting of the Federal Reserve, which is expected to announce a drawdown of its massive bond holdings.

The Fed is due to begin a two-day monetary policy meeting Tuesday and markets will be watching to see how chairwoman Janet Yellen describes recent trends in inflation for the world's largest economy, hoping for clues about the timing of the next interest rate rise.