"The market was flooded with positive factors such as the weak yen, gains on Wall Street, falling yields and low short-term interest rates," said Mitsuhiro Nakano, a strategist at Daiwa Research Institute. "Although almost all shares gained today, high-tech issues, particularly Sony, rose sharply and banking issues rose as well," Nakano said.

The Nikkei-225 index jumped 710.55 points to end at 14,894.00, its highest level since December 2. It was the largest one-day points jump since early October, when major bank reforms were being enacted. The Topix index of all issues in the first section on the Tokyo Stock Exchange gained 41.61 points to 1,146.72.

Trading was active with volume in the first section estimated at 669 million shares, compared with 389.4 million shares on Thursday.

Shares were lifted from the outsetby a strong performance on Wall Street on Thursday and strong bank stocks soon drove the market higher. "There was also a psychological factor that pushed the Tokyo shares as many investors rushed to buy after the Nikkei index broke the 14,500-point level," Nakano said.

Masaaki Higashida, senior market analyst at Nomura Securities Co Ltd, said: "Many foreign investors were net buyers as they were encouraged by Bank of Japan's anti-deflation measures."

Taichi Sakaiya, head of the Economic Planning Agency, said on Friday the central bank's decision to push short-term rates down close to zero, which sparked the fall in long-term bond yields, was "advantageous to economic recovery."

Long-term interest rates have tumbled as the Bank of Japan, independent only since last year, moved to ease monetary policy and stave off deflation. The yield on the benchmark 10-year government bond, which moves inversely to price, closed at 1.570 per cent on Friday, compared with 1.610 the previous day.

Major banks gainedground a day after formally asking for a combined 7,459 billion yen ($ 60 billion) in cash injections from the government to help them clear out bad loans. The money, which will be poured into the banks at the end of the month, is the key part of a major bank recapitalisation programme enacted last October.