TOKYO: Japanese shares ended up 1.78 percent on Wednesday, buoyed by the Dow in New York hitting its highest level in two and a half years as well as receding concerns over unrest in Egypt, brokers said.

The Nikkei index at the Tokyo Stock Exchange gained 182.86 points to close at 10,457.36, the largest point-gain since November 18. The Topix index of all first-section shares rose 1.76 percent, or 16.12 points, to 929.64.

Analysts said the Nikkei gained on strong US manufacturing data and reducing concerns in the Middle East after Egyptian President Hosni Mubarak announced that he would not run in the next presidential election.

Tsuyoshi Segawa, equity strategist at Mizuho Securities, said "the trend to (avoid) risky assets has reversed, sparking the flow of cash into equity markets."

But Retela Crea Securities general manager Yosuke Shimizu said it was too early to assume Japanese stocks were back on an upward trend in the longer term.

"We're still not at the stage where the US economy has recovered to the point that interest rates are going up, which would erase concerns about the firmer yen," he said.

TDK closed 3.41 percent higher at 5,750 yen, while Toyota soared 3.26 percent to 3,480 and Nissan added 3.10 percent to reach 863.

Major US market indices were higher, buoyed by indications the US economy is moving steadily away from its recession trough, including strong January car sales, better-than-expected manufacturing growth and solid earnings reports from Pfizer, UPS, and Archer Daniels Midland (ADM).

The Dow on Wall Street surged 1.25 percent to 12,040.16 points, its first close above 12,000 since June 19, 2008.

There were also strong gains for the broader S&P 500 index, which ended up 1.67 percent, and the tech-heavy Nasdaq, which closed 1.89 percent higher.

-- Dow Jones Newswires contributed to this report --