Japanese shares are likely to extend their rallies next week thanks to the weak yen after the country's new government vowed to push for aggressive monetary easing, brokers said.
"Profit-taking may emerge anytime because the pace of the recent gain was quite fast," said Hirokazu Fujiki, strategist at Okasan Securities. "But such adjustment is unlikely to change this upward trend completely."
Fujiki says the market is looking to the Bank of Japan's monetary policy meeting in late January as Prime Minister Shinzo Abe, who took office late December, steps up pressure on the central bank to take bold easing steps.
Abe threatened to change a law guaranteeing the central bank's independence if it did not agree to set a two-percent inflation target, in a bid to drag Japan out of the deflation that has haunted its economy for years.
CLSA equity strategist Nicholas Smith told Dow Jones Newswires that the "focus will be on who Prime Minister Abe wants to recommend as the new Bank of Japan governor".
It has spawned speculation that he will want someone willing to agree to his inflation target to replace current governor Masaaki Shirakawa, whose five-year tenure ends on April 8.
The benchmark Nikkei 225 index, which surged more than four percent the previous week, rose 2.82 percent, or 292.93 points, to 10,688.11 for the week to January 4, the first day of 2013 trading.
Tokyo financial markets had been closed for holidays all week until reopening on Friday.
The Topix index of all first-section issues on the Tokyo Stock Exchange gained 3.34 percent or 28.71 points to 888.51.
Among major indicators to be released next week are Japan's November current account and US trade balance figures also for November. The market will also look to the European Central Bank's monetary policy meeting on Thursday.