Briefly topping the 30,000 mark, the 225-issue Nikkei Stock Average finished 256.25 points, or 0.86 percent, higher from Monday at 29,916.14, its highest close since April 5.
After Japanese Prime Minister Yoshihide Suga on Friday announced he did not intend to seek re-election in the upcoming leadership race for the ruling Liberal Democratic Party (LDP), effectively giving up the premiership, the Nikkei index has risen around 5 percent.
The index of all First Section issues on the Tokyo Stock Exchange ended 22.16 points, or 1.09 percent, higher at 2,063.38, refreshing the highest closing level since Aug. 16, 1990.
Trading volume on the main section increased to 1,257.38 million shares from Monday's 1,176.83 million shares.
The Nikkei index briefly went over the 30,000 mark minutes after the market opened in the morning. However, the increasing momentum slowed with some investors realizing their profits accumulated over such a short term.
Brokers said that as Suga's approval rate has decreased to a low level, his decision reduced political uncertainty caused by a possible LDP's defeat in the upcoming general election, supporting the recent surge in Tokyo stocks.
Yutaka Miura, a senior technical analyst at Mizuho Securities Co., said, "Foreign investors, who had sold (Nikkei) futures from earlier this year, bought back on optimism about new economic and other measures to battle the pandemic under a new ruling party leader."
Despite the strong performance of the Tokyo market, some brokers reminded market participants that the surge was based on expectations and that selling for quick profits could still kick in easily.
By the close of play, the leading sectors shifted to air transportation, land transportation, and warehousing and harbor transportation service on Tuesday.
Advancing shares outnumbered declining ones 1,477 to 602 on the First Section, while 110 finished unchanged.
As the daily COVID-19 infections decreased in recent days with Tokyo's figure on Monday falling below 1,000 since July 19, an expected recovery in domestic travel demand supported a rise for air and land transportation firms.
Among them, Japan Airlines rose 2.2 percent, ANA Holdings advanced 3.1 percent, East Japan Railway gained 3.1 percent, and Tobu Railway ended 1.8 percent higher.