TOKYO: Japanese shares marked their highest close since May, rising 1.65 percent on Tuesday on the first trading day of 2011, boosted by a rally on Wall Street .
Rising oil prices particularly drove up resource-related shares at the Tokyo Stock Exchange , but there were gains across the board.
The headline Nikkei index surged to 10,398.10, the highest level since May 14, when it ended at 10,462.51.
The Topix index of all first section shares jumped 1.45 percent to 911.80, as investors cheered recent gains in overseas bourses.
Crude oil futures in New York hit a fresh two-year high on Monday and boosted shares of trading houses, mining firms and other companies related to natural resources.
Hopes are rising that crude prices will remain solid on a US recovery and growing demand for synthetic fibres, some of which are derived from oil products, mainly in Asia due to a shortage of cotton, Hirofumi Kawachi, analyst at Mizuho Investors Securities, said.
Other analysts said, however, that the latest rebound was driven only by short-covering after a sharp market drop last Thursday, the final trading day of 2010 in Japan.
"Buying won't go beyond that, so 10,400 will be a tough level to crack," Yumi Nishimura, deputy general manager at Daiwa Securities Capital Markets, told Dow Jones Newswires.
Energy and resource related shares gained.
Trading house Mitsui and Co jumped 2.46 percent to 1,374 yen and Japan's biggest oil and gas field developer Inpex soared 3.99 percent to 494,500.
Japan Petroleum Exploration jumped 5.34 percent to 3,255.
Major synthetic textile maker Teijin added 2.01 percent to reach 354 yen.
Among other major shares, Canon rose 0.83 percent to 4,245. Sony gained 1.60 percent to 2,974.
Honda Motor rose 0.46 percent to 3,230. Toyota Motor rose 1.39 percent to 3,265.
