Japanese shares will likely be stable next week after gains in the past two days as investors expect further monetary easing moves by the Bank of Japan, an analyst said Friday.
Tokyo stocks jumped 2.20 percent Friday, driven by a weaker yen after the frontrunner to become Japan's next prime minister said he would push for an aggressive loosening of monetary policy by the central bank.
Liberal Democratic Party (LDP) leader Shinzo Abe, tipped to become prime minister after a December 16 election, on Thursday called for "unlimited" easing by the BoJ, and vowed to strike a deal with it over further measures if he wins.
Stock prices were "likely to stay firm even after gains this week", said Kenji Shiomura, strategist at Daiwa Securities.
"Elections are not set and markets are appreciating the monetary-easing stance by Mr Abe. Currency rates turned favourable, boosting automobiles and other export issues," he said.
In forex trade, the dollar changed hands at 80.95 yen up from the 80.20 yen level a day earlier in Tokyo.
The euro bought 103.28 yen, down from 103.69 yen in US trade but well up from 102.11 yen Thursday in Asia.
In the week to November 16, the benchmark Nikkei 225 index at the Tokyo Stock Exchange rose 3.05 percent, or 266.56 points, to 9,024.16.
The broader Topix index of all first-section issues gained 2.82 percent, or 20.60 points, to end at 751.34
Investors will likely continue to maintain expectations at least until BoJ governor Masaaki Shirakawa's term expires in April, Shiomura said.
"Hopes for a change in political regime to the more traditionally business-friendly LDP and a more aggressive BoJ easing policy continue to fuel the current rally," Monex market analyst Toshiyuki Kanayama told Dow Jones Newswires.
Kenichi Hirano, market analyst at Tachibana Securities, said: "The Nikkei's push through 8,900 appears to have ignited some share buybacks by hedge funds."
After falling by so much so fast, however, it is too optimistic to assume that the yen will continue to fall much further, as external factors, such as the US fiscal cliff, show few signs of diminishing, Hirano said.