Japanese stocks soared to a seven-year high on Friday after the yen dropped sharply after Scottish voters rejected a bid for independence and averted a break-up of the United Kingdom.

Afternoon comments by Prime Minister Shinzo Abe to carry out pension reforms as soon as possible bolstered the already upbeat sentiment.

The Nikkei share average ended 1.6 per cent higher at 16,321.08, the highest closing level since 2007 and before the collapse of Lehman Brothers. It was the biggest daily percentage gain in a month, and was up 2.3 per cent for the week. During the session, the index easily topped a December 30 high of 16,320.22.

“Abe’s comment triggered short-term investors’ buying,’’ said Norihiro Fujito, a senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities investors, adding that his comments were perfectly timed to coincide when the risk appetite was rising.

Pension reforms

Japanese Prime Minister Shinzo Abe said in the early afternoon that he aims to reform the country’s $1.2-trillion public fund as soon as possible. “I believe GPIF reforms are extremely important .... I would like to review its portfolio as soon as possible,’’ Abe told business leaders in a speech.

Analysts said the yen’s moves against the dollar will be key to how much further momentum is carried through in the market.

After Scottish voters rejected independence in a referendum, sterling jumped to a two-week high against the US dollar. The dollar jumped to as high as 109.46 yen, driving exporter shares higher, with Nissan Motor Co rising 1.6 per cent, Fuji Heavy Industries jumping 4.6 per cent and Advantest Corp climbing 2.2 per cent.

Index-heavy stocks such as Fast Retailing Co and Fanuc Corp soared 3.6 per cent and 2.5 per cent, respectively. The broader Topix gained 1.1 per cent to 1,331.91, and the JPX-Nikkei Index 400 added 1.2 per cent to 12,085.85.

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