Japan's financial stocks joined a global rally on Wednesday to help lift the Nikkei share average by 1.9%, its biggest gain in two months, even as investors braced for a crucial U.S. Federal Reserve policy decision later in the day.
Nomura Holdings and Daiwa Securities each posted gains of about 4.5% as investors took heart from assurances by U.S. Treasury Secretary Janet Yellen that deposits at smaller lenders will be safeguarded.
Elsewhere, online company Rakuten Group surged nearly 6% after Reuters reported that the company plans an initial public offering of its banking arm as soon as next month.
A sharp weakening in the yen overnight also buoyed the overall market, with automakers getting a particular boost. Energy shares rallied amid strong gains in crude oil prices, while advances for U.S. tech shares helped lift Japanese chip stocks.
"Worries about the financial sector have retreated one notch, and as a result the Japanese stock market is moving to retrace what it lost on Monday," said Maki Sawada, a strategist at Nomura Securities.
The Nikkei rose 1.9%, its biggest gain since Jan. 18, to end the day at 27,466.61.
Financials gained 2.6%, the second-best performing sector after energy's 2.7% rally.
The broader Topix added 1.7% to 1,962.93.
Japanese markets were closed on Tuesday for a public holiday.
Money markets now lay 83% odds on a quarter-point hike, up from closer to a coin flip earlier in the week.
Nissan led gains among automakers, surging 3.9%. Honda advanced 2.9%, while Toyota added 1.9%.
Chipmaking equipment giant Tokyo Electron gained 2.3%, and chip-testing equipment maker Advantest rose 2.8%.
Uniqlo store operator Fast Retailing was the Nikkei's biggest support, contributing 49 points to the index's total 521-point advance with a 1.7% rise.
Startup investor SoftBank Group was another notable winner, gaining 2.8%.
Of the Nikkei's 225 components, 214 rose versus 10 that fell and one that was flat. (Reporting by Kevin Buckland; Editing by Nivedita Bhattacharjee and Sonia Cheema)