The Nikkei jumped 2.54 percent on Friday to mark its highest close since June 5 as exporters such as Toyota Motor gained on rising hopes that the US interest rate-hike cycle may be nearing an end, easing concern of a slowdown in the world's largest economy.
Non-ferrous metals stocks including Sumitomo Metal Mining Co Ltd advanced after gains in copper and gold prices, while energy stocks climbed on higher oil prices.
The Nikkei rose 384.03 points to 15,505.18, its highest close in nearly four weeks. The Nikkei rose 2.52 percent on the week, posting the biggest weekly jump since the first week of April.
The TOPIX index surged 2.53 percent to 1,586.96, also the highest finish since June 5. In a widely expected move, the US central bank raised its benchmark rate by a quarter-percentage point to 5.25 percent on Thursday. But investors interpreted the Fed's policy statement - that moderating economic growth could limit inflation going forward - as a signal the bank may pause after its latest hike.
"The Fed's move has erased concerns that the US economy could face stagflation. That means earnings at Japanese companies won't be dented by such a risk any more," said Yosuke Shimizu, head of investment information centre at Monex Inc.
Tsutomu Yamada, a market analyst at Kabu.com Securities Co, said traders will be keeping a close eye on the BOJ's tankan corporate sentiment survey on Monday and on the bank's policy setting meeting on July 13 and 14.
"It's now a Japan factor to which investors have to pay attention," Yamada said. "Once the BOJ ends its zero interest rate policy, investors will be able to take a deep breath. But until then, the market will remain volatile."
Upcoming quarterly earnings results are also of interest to fund managers. Toyota Motor Corp, the world's most profitable auto maker, soared 4.2 percent to 5,990 yen, its highest close in more than three weeks. Rival Nissan Motor Co Ltd jumped 5 percent to 1,250 yen.
Other technology exporters dependent on US demand gained ground with chip-equipment maker Advantest Corp adding 2.8 percent to 11,660 yen. In the non-ferrous metals sector, Sumitomo Metal Mining, Japan's top gold producer, soared 6.2 percent to 1,492 yen and top non-ferrous metal smelter Mitsubishi Materials Corp rose 5 percent to 488 yen.
After the market closed, Japan Airlines Corp, the country's top airline by revenue, said it would raise up to 222.71 billion yen ($1.94 billion) by issuing 700 million new shares, the funds to be used to buy planes and parts. Japan Airlines ended flat at 287 yen.
Trading volume rose for the first time since June 22, with 1.65 billion shares changing hands on the Tokyo exchange's first section, higher than last week's daily average of 1.54 billion. Gainers overwhelmed decliners 1,443 to 187.