TOKYO - Tokyo stocks rose sharply on Friday, with the Nikkei stock index surging over 4 percent at one stage, driven by optimism about the prospects of the United States and Iran signing a peace deal to end the Middle East conflict.
The 225-issue Nikkei Stock Average ended up 1,802.77 points, or 2.81 percent, from Thursday at 66,020.04. The broader Topix index finished 51.61 points, or 1.35 percent, higher at 3,881.96.
On the top-tier Prime Market, the main gainers were nonferrous metal, machinery and iron and steel issues.
The U.S. dollar strengthened to the lower 160 yen range in Tokyo as traders remained cautious. Unlike stock market investors, they deemed that Iran had shown signs of maintaining a tough stance and doubted announcements by the United States.
"The stock market is reacting positively, maybe even too positively," said Takuya Kanda, senior researcher at the Gaitame.com Research.
At 5 p.m., the dollar fetched 160.27-29 yen compared with 159.88-98 yen in New York and 160.50-51 yen in Tokyo at 5 p.m. Thursday.
The euro was quoted at $1.1567-1568 and 185.39-43 yen against $1.1574-1584 and 184.88-98 yen in New York and $1.1544-1546 and 185.29-33 yen in Tokyo late Thursday afternoon.
The yield on the benchmark 10-year Japanese government bond ended down 0.045 percentage point from Thursday's close at 2.635 percent, as inflation concerns eased following a decline in crude oil futures.
The Nikkei stock index briefly topped the 67,000 threshold for the first time in more than a week, after U.S. President Donald Trump said the deal could be sealed in a few days, alleviating concerns of an escalation.
"Expectations (for an end to the war) appear to be rising, as comments from the Iranian side this time did not seem overly negative," said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co.
Investor sentiment was also supported by a decline in the benchmark West Texas Intermediate crude oil futures to below $90 per barrel.
Artificial intelligence- and semiconductor-related shares rose sharply, tracking overnight gains in U.S. counterparts, while profit-taking and fund transfer trimmed some gains.
"The recent trend seen over the past week, in which the market has been driven by the heavyweight AI- and chip-related shares, was evident again today," said Maki Sawada, strategist in the Investment Content Department of Nomura Securities Co.
The rally in tech shares lifted Kioxia Holdings Corp. to become Japan's most valuable publicly traded company by market capitalization, surpassing Toyota Motor Corp.
