TOKYO: Japan's Nikkei share average ended at a near six-month high on Wednesday, as investors scooped up cheap stocks on hopes of an economic rebound, while SoftBank Group jumped after its share-swap deal with Deutsche Telekom.

The Nikkei share average rose 0.89% to close at 30,181.21, its highest since March 18. The broader Topix advanced 0.79% to 2,079.61.

"Foreign investors, who had paid little attention to Japanese stocks, have realised how cheap they are," said Shoichi Arisawa, general manager of the investment research department at IwaiCosmo Securities.

Nikkei hits five-month high on hopes new PM will propel recovery

Declines in Japanese markets until recently have dragged their valuations, with Arisawa saying the Nikkei's P/E was "cheap", at around 13 times this financial year's estimated earnings.

Its recent gains, however, come against the backdrop of Prime Minister Yoshihide Suga's abrupt announcement that he would not seek re-election for his party's leadership last week.

His Liberal Democratic Party (LDP) will hold a leadership election on Sept. 29 and the winner of the vote is all but assured to be Japan's next prime minister.

Investors are betting that Japan's coronavirus-hit economy would recover under stimulus packages, while strong corporate outlook would underpin the main indexes, according to market participants.

SoftBank Group closed up 4.64% after the global start-up investor made a $7 billion share-swap deal with Deutsche Telekom It failed to keep an earlier gain of more than 10% but was the biggest contributor to the Nikkei's gain along with chip-related stocks which tracked the Nasdaq higher overnight.

Advantest and Tokyo Electron rose 3.41% and 2.35%, respectively.

SoftBank Group was the top performer on the Nikkei, followed by Nikon, which rose 4.18% and Rakuten Group , up 3.89%.

JFE Holdings, which fell 1.94%, was the worst performer on the index, followed by Chugai Pharmaceutical , losing 1.86% and Nippon Express, which fell 1.48%.