The benchmark Nikkei average rose 575.06 points, or 4.12 per cent, to 14,527.81. December Nikkei futures were up 450 at 14,450.

Barton Biggs, Morgan Stanley Dean Witter's top global strategist, raised Japanese equities to 75 per cent of their neutral weighting from 40 per cent in his model portfolio.

A neutral weighting would be 100 per cent, meaning that Japanese equities in Biggs' portfolio would equal the same proportion they make up of world equity capitalisation. Traders said that while Biggs remains underweight in Japanese stocks, his bullish comments helped reinvigorate the market.

"He speaks, the market rises," said Masayuki Nishina, a trader at New Japan Securities. Nishina said the tone of Biggs' comments were especially positive.

"Japan could be the next big trade," Biggs wrotein a Global Strategy Bulletin dated Monday. "The Japanese market is truly cheap."

Japanese markets were closed Tuesday for a holiday and hadits first chance to react to Biggs' move on Wednesday.

Banking shares, which cluttered the most actives list, were whipped higher by the news, as well as residual optimism over discussions between Dai-Ichi Kangyo Bank and Fuji Bank about forming a venture with Yasuda Trust & Banking.

"There is some inclination to interpret the events of the last month -- especially the banking bills -- in a more positive light," said Coen Kluyver, head of institutional sales at ING Baring Securities. He was referring to the Japanese parliament's enactment of legislation earmarking as much as 43 trillion yen to recapitalise the country's rickety banks.

Dai-Ichi Kangyo rose 18 to 792, Fuji 39 to 538 and Yasuda Trust 23 to 150. Sakura Bank -- the day's most-active issue -- rose 30 to 335.