Japan's Nikkei rose to more than a three-month high on Thursday after US stocks extended gains as positive developments in trade negotiations underpinned the sentiment, while index-heavy stocks such as Fanuc and Fast Retailing advanced.
The Nikkei share average gained 0.6 per cent to 22,977.54 points in midmorning trade, after climbing to 23,032.17 points, its highest level since May 21.
NAFTA trade deal
On Wednesday, the leaders of the United States and Canada had expressed optimism that they could reach a new North American trade deal by a Friday deadline, although Canada warned that a number of tricky issues remained.
Analysts said the NAFTA talks boosted the appetite for riskier assets, including Japanese stocks. However, with the Nikkei trading above its psychologically important level of 23,000 this week, profit-taking could kick in.
“Investors are cheering the developments. But they are not overly optimistic because while the market is focusing on North American trade issues now, they haven't forgotten about China-U.S. trade worries,” said Isao Kubo, an equity strategist at Nissay Asset Management.
Index heavyweight stocks led the gains, with Fast Retailing , an operator of Uniqlo clothing stores, up 1.0 per cent and industrial machinery maker Fanuc Corp adding 0.9 per cent. The two stocks contributed a hefty 25 points to the Nikkei benchmark index.
Mining was the top gaining sector on the board after oil prices extended their rally on Thursday due to a fall in US crude inventories and expected disruptions to supply from Iran and Venezuela. Inpex Corp surged 1.7 per cent.
On the weak side of the market, bank stocks languished. Mitsubishi UFJ Financial Group shed 0.8 per cent and Sumitomo Mitsui Financial Group fell 1.0 per cent. The broader Topix added 0.1 per cent to 1,741.69.