Japanese stocks rose on Wednesday as banks and financial shares tracked their US counterparts higher, shrugging off another North Korean missile launch.

The Nikkei share average ended 0.5 per cent higher at 22,597.20, while the broader Topix advanced 0.8 per cent to 1,786.15.

Financial and securities shares were among the big gainers, with the banking subindex rising 2.2 per cent and the insurance subindex 3.2 per cent higher.

On Wall Street, all three major indexes logged record closing highs, led by surging financials.

In testimony before a Senate committee, Jerome Powell, nominated to replace Janet Yellen as Federal Reserve chair, defended the need to potentially lighten regulation on the financial sector.

Sentiment remained intact despite North Korea firing what appeared to be an intercontinental ballistic missile (ICBM) that landed close to Japan.

Nomura Holdings gained 1.1 per cent, after Japan's biggest brokerage and investment bank said it would cancel treasury shares worth 4.7 per cent of its outstanding shares on December 18

Drugstore chain MatsumotoKiyoshi Holdings shares rose 3.4 per cent after a media report said the company will tie up with insurer Dai-ichi Life Holdings to sell insurance products in December.