Japan's Nikkei rose on Monday, tracking gains on Wall Street after a U.S. inflation report supported expectations of interest rate cuts in the world's largest economy this year.
The Nikkei index closed up 1.13% at 38,923.03 points, after hitting the morally important 39,000-point level earlier in the session.
The broader Topix index closed 0.92% higher at 2,798.07.
US data boosts interest rate cut
Sentiment improved as the market reacted to the US personal consumption expenditures price index data released on Friday, which showed the index rose 0.3% last month, in line with expectations, which strengthened expectations that the US Federal Reserve will cut interest rates this year.
The Dow Jones and S&P 500 ended higher on Friday, adding to a sense of relief in Tokyo trading and supporting broad-based gains in Japanese stocks.
Of the 225 stocks on the Nikkei index, 185 rose and 40 fell.
The financial sector index, which tends to benefit from higher interest rates, rose on Monday with insurers up 3.1 percent and securities firms up 3.8 percent, the best performers among the Tokyo Stock Exchange's 33 sub-indexes.
Among individual stocks, Daiwa Securities Group jumped 5.6% and Nomura Holdings gained 4%.
Tokyo Electron, a chip-making equipment maker, rose 1.7% and Fast Retailing rose 1.8%.
Shares of a number of automakers fell after Japan's transport ministry said violations had been found at five major automakers. Mazda Motor and Toyota Motor were the biggest losers, down 3.3% and 1.8% respectively.
