The 225-issue Nikkei Stock Average finished up 392.70 points, or 1.37 percent, from Monday at 29,069.16, its highest close since Nov. 25.
The broader Topix index of all First Section issues on the Tokyo Stock Exchange ended 27.12 points, or 1.37 percent, higher at 2,005.02.
Every industry category gained ground except for marine transportation issues. Gaining issues were led by precision instrument and electric appliance issues.
Investors bought a wide range of issues throughout the day due to advances in U.S. shares, leading the Nikkei index to rise above 29,000 psychological threshold. The U.S. dollar also hit its highest level against the yen since Nov. 26, becoming a tailwind for export-oriented shares, brokers said.
"The Nikkei index was heartened by the rally on Wall Street, with large cap chip-related issues lifting the market following advances in the (technology-heavy) Nasdaq index," said Yutaka Miura, senior technical analyst at Mizuho Securities Co.
Meanwhile, sentiment was additionally supported by Japan's industrial output in November, which grew a higher-than-expected 7.2 percent from the previous month for the second straight month of increase, brokers said.
On the First Section, advancers outnumbered decliners 1,871 to 252, while 62 finished unchanged.
Among chip-related shares, Tokyo Electron added 1.8 percent, while Advantest gained 0.9 percent.
As for exporters, Kyocera climbed 1.4 percent and Fujitsu General grew 1.7 percent.
Shimamura jumped 4.1 percent, a day after the apparel retail chain released an optimistic earnings report for the nine months to Nov. 20.
Kewpie rose 2.6 percent, after the food product manufacturer revised upward its earnings forecast on Monday for the business year through November 2021 from its previous estimate in July.
Trading volume on the main section increased to 952.49 million shares from Monday's 777.48 million shares.
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