TOKYO, Nov. 4 (Xinhua) -- The Nikkei stock index gained 2.73 percent Tuesday to close at a fresh seven-year high as the Bank of Japan's (BOJ) surprising decision Friday to further ease its massive monetary program, coupled with the government pension fund deciding on a bigger allocation of stock acquisitions, sent the yen lower versus the U.S. dollar.
The Nikkei 225 index gained 448.71 points to finish at 16,862. 47, marking its highest closing level since October 2007, while the broader Topix index of all first-section issues added 2.63 percent, or 35.01 points, to close at 1,368.65.
Following a three-day weekend as markets here were closed Monday for a national holiday, local traders said the market continued from the off to be enthused by the BOJ's decision on Friday to expand its already massive asset buying program.
The Nikkei surged 4.8 percent at the end of last week following the central bank's move and hit its highest intraday level at 17, 127.66, since the middle of Oct. 2007, as the weaker yen continued to motivate investors to chase riskier assets like stocks higher.
"The impact of the BOJ's additional easing was big, so it couldn't be priced in during just one day. There is a risk in not holding Japanese shares, and those that sold them off will have to buy them back," said Toshihiko Matsuno, a chief strategist at SMBC Friend Securities Co.
Other analysts pointed out that some selling was seen in the afternoon session, as investors looked to secure early gains, but with the U.S. dollar Tuesday changing hands at 113.33 yen, compared to 113.99 yen logged in New York late on Monday, exporter issues, for example, remained an attractive proposition.
On Monday, the yen dropped to a fresh seven-year low at 114 yen versus the greenback, with some experts suggesting that investors were inspired by U.S. market's positive reaction to the BOJ's latest move and the bank itself giving more than a tacit nod to a weaker yen.
"The U.S. reaction to the Kuroda bazooka was unexpectedly big and the yen's plunge also has a big impact. The BOJ endorsed a weak yen in a sense by further easing its credit grip," noted Hirokazu Kabeya, a senior strategist at Daiwa Securities.
Exporter-related issues continued to attract buying Tuesday, as they benefit from a weaker yen as their competitiveness is boosted in overseas markets and profits made there are inflated when repatriated, and as such top-automaker Toyota accelerated 4.7 percent to 6,800 yen, while smaller rival Nissan Motor jumped 3 percent to 1,028 yen. Fuji Heavy Industries, who makes Subaru cars, meanwhile, surged 11.7 percent to finish at 4,019 yen.
Consumer electronics behemoth Sony Corp. surged 11 percent to 2, 301 yen, achieving its highest closing level in three-and-a-half years, while Panasonic leapt 5.97 percent to 1,383 yen. Sharp, for its part, added 2.55 percent to close at 281 yen.
Japan's brokerages comprised the day's best performing sector with Daiwa Securities leaping 12.27 percent to 966 yen and Nomura jumping 7.71 percent to close at 727 yen.
Among other financial issues, Higashi-Nippon Bank soared 15.4 percent to 322 yen, following reports that the local bank will merge with the Bank of Yokohama to create the largest regional banking group in the country. The Bank of Yokohama ended the day up 3.4 percent at 658 yen.
Trading volume on Tuesday jumped to 5.20 billion shares on the Tokyo Exchange's First Section, up from Friday's volume of 4.01 billion shares, with advancing issues outnumbering declining ones by 1,198 to 563.
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