TOKYO, May 26 — Tokyo stocks closed sharply higher today as investors took heart from the lifting of Japan’s coronavirus state of emergency and hopes for the gradual reopening of the world’s third-largest economy.

The benchmark Nikkei 225 index ended up 2.55 per cent, or 529.52 points, at 21,271.17, while the broader Topix index was up 2.17 per cent, or 32.53 points, at 1,534.73 at the close.

"The lifting of the state of emergency boosted expectations for a resumption of economic activity,” said Mizuho Securities.

With US and British markets closed for public holidays, Japanese shares also won a boost from a rally on the European markets, analysts said.

Japan lifted its nationwide state of emergency late yesterday, but government officials urged continued caution to prevent another wave of coronavirus infections.

Prime Minister Shinzo Abe said the government is preparing a second massive stimulus package to shore up the virus-hit economy — comments that also supported the market.

Tokyo shares were higher across the board, with Honda rallying 4.31 per cent to ¥2,743.5 (RM111.02), Uniqlo casual-wear operator Fast Retailing gaining 3.93 per cent at ¥56,780, and parts maker Shin-Etsu Chemical higher by 4.19 per cent at ¥12,530.

Suzuki Motor surged 6.58 per cent to end at ¥3,772. After the market close the small car specialist said it will pay special dividends to mark 100 years since its foundation despite falls in sales and profits in the past year to March.

The dollar was quoted at ¥107.83 in Asian trade, against ¥107.72 in late Tokyo hours yesterday. — AFP