Japan's Nikkei share average surged 2.9% to complete 10 straight weeks of gains, its longest winning streak since 1987, as heightened expectations of central bank easing early next week put further downward pressure on the yen.
The Nikkei advanced 303.66 points on Friday as it produced its biggest one-day percentage gain in 22 months.
Friday's advance allowed the Nikkei to have a 1% gain for the week.
Exporters led the pack, with Toyota Motor Corp adding 2.1%, Honda Motor 3.2% and Panasonic Corp climbing 5.3%. A weaker yen means their overseas revenue will be higher once repatriated.
The Japanese currency stooped to a fresh 2-1/2 year low of 90.2 yen to the dollar on Friday after an economic adviser to Prime Minister Shinzo Abe, Koichi Hamada, told a press conference a weakening of the yen to 95 to 100 yen was nothing to worry about.
The Bank of Japan and the government have agreed to set 2% inflation as the central bank's policy target in a joint statement likely be issued next week, although no clear timeframe has been fixed to meet the goal, a deputy economics minister said on Friday.
"Abe has been successful in lifting investor sentiment. A good result has to be delivered, and we still don't know whether it will be, but the fact that he boosted investors' risk appetites is very positive," said Tetsuro Ii, the chief executive of Commons Asset Management.
The Nikkei has sprinted up 25% in the two months since then-incoming leader Shinzo Abe began calling for further policy easing, causing the yen to weaken.
"Foreign investors are becoming increasingly eager to add more Japanese stocks," said Ii.
A trader at an European brokerage said investors are buying call options at a strike price of 11,000, or 0.8% above the Nikkei's current level.
Credit Suisse was the latest to upgrade Japanese equities, bumping them up to 5% overweight on a short-term basis, with a year-end Nikkei target of 12,000.
"Fiscal and monetary policy are increasingly proactive: the BoJ's balance sheet is set to expand in 2013 by more than those of other central banks, even before the potential change in the BoJ inflation target," Credit Suisse analysts wrote in a report, adding that the BOJ has a track record of unconventional purchases of REITs and exchange traded funds.
However, the brokerage added, "On a 1 to 5-year view, we are more cautious due to poor demographics, weak corporate governance and a primary budget deficit of 9% of GDP."
Some market participants are sceptical that the Nikkei's gains will last beyond the BOJ's meeting on January 21-22, saying that the inflation target has already been priced in.
"I think it's pretty much peaked out. Volume has been superb, but I think it will take some time to digest these gains, and people should be merely cautiously optimistic," said Yasuo Sakuma, portfolio manager at Bayview Asset Management.
Sakuma said the Nikkei was likely to enter a correction phase next week as a 2% inflation target is already priced in. The benchmark headed into "overbought" territory again on Friday, signalled by a breach of the 70-mark on its 14-day relative strength index.
The Topix added 2.4% to 911.44, its highest since March 11, 2011 when a massive earthquake and tsunami hit Japan. Trade was active, with 3.86 billion shares changing hands.
Cash for Sony
Sony Corp was in focus, jumping 12.2% to a six-month high after it announced its US subsidiary would sell its New York headquarters building for $1.1 billion, expanding its operating income by an expected $684 million.
It was also the most-traded stock on the mainboard by turnover.
Nikon Corp put on 5.1%, almost regaining the nearly 4.5 year high it hit on Tuesday, after US chipmaker Intel Corp - with whom it is developing a new chip stepper - beat analysts' estimates with its capital spending forecast for 2013.
Laggards of the day included All Nippon Airways Co Ltd and Japan Airlines Co Ltd, after they were hit by a double blow of safety issues with the new Boeing 787 Dreamliner and rising oil prices due to the Algerian hostage crisis.