Japan's Nikkei share average scaled its loftiest peak in more than two decades on Thursday, hoisted by records on Wall Street and underpinned by media forecasts that the ruling party bloc was headed for a win in elections later this month.

The Nikkei ended up 0.4 per cent at 20,954.72, after earlier rising as high as 20,994.40, its highest since December, 1996.The broader Topix was 0.2 per cent higher at 1,700.13, after touching 1,703.67, its highest since July 2007.

Next Fed candidate

Major stock indexes on Wall Street on Wednesday finished at record closing highs, bolstered by a report that a market-friendly candidate was being pushed as successor to Federal Reserve Chairman Janet Yellen.

Also aiding sentiment, media forecasts showed Prime Minister Shinzo Abe's ruling bloc heading for a surprisingly big win in a snap election on October 22, assuring investors that his "Abenomics” programme of easy monetary policy, fiscal spending and promised structural reforms would continue.

“All of the polls were in line, so that makes the chances of Abe's party's victory seem high,” said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities. “He was already likely to win, but a bigger than expected win would help him stick to his programmes.”

The Nikkei remains far from its record peak of 38,915, logged in December 1989.

“I think that 21,000 looks difficult to break within this week, but I wouldn't be surprised if the Nikkei hit that milestone next week,” Fujito added.

Shares of Kobe Steel , which have plunged more than 35 per cent this week after the steelmaker was caught up in a data fabrication scandal, edged up 0.5 per cent.

A senior Japanese trade official said on Thursday that the trade ministry was treating the data fabrication as a serious matter that affected trust in the country's manufacturing industry. Kobe Steel's CEO said the firm's data-fabrication may have spread beyond Japan.

Japan's Toshiba Corp shares added 3.8 per cent after the Tokyo Stock Exchange said on Wednesday that it was taking the beleaguered electronics giant off a special watchlist, citing improved internal controls. The move reduces but does not completely remove the risk of a delisting.

Restaurant operator Saizeriya Co soared 9.6 per cent after it reported on Wednesday a 36.2 per cent rise in its group net profit in its past business year, and forecast a 12.1 per cent rise for the current the year through August 31, 2018.

Aomori Bank shares jumped 11.3 per cent after the regional lender said it will scrap a plan to issue new shares, which it had announced on October 3.

On the losing side, the oil and coal sub-index shed 1.3 per cent and the mining sub-index dropped 1.1 per cent. Oil prices eased on Thursday as US fuel inventories rose despite efforts by OPEC to cut production and tighten the market.

The JPX-Nikkei Index 400 rose 0.2 per cent to 15,005.17.

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