Japan's Nikkei 225 Stock Average gained for a sixth week, its longest rally in four years. Banks such as Mizuho Financial Group Inc and UFJ Holdings Inc rose after a Merrill Lynch & Co survey showed more fund managers plan to buy more of the nation's equities.
"Overseas investors have been gradually increasing their stakes in Japanese stocks," said Tatsuro Yuzawa, a Tokyo-based fund manager at Credit Suisse Trust & Banking Co's investment arm, which handles US$292 billion in assets globally.
"They are now looking for areas that haven't been sought after, such as banks," Yuzawa said.
For the week, the Nikkei rallied 2.1 percent, completing its longest weekly winning streak since a seven-week rally ended on July 16, 1999.
The Topix rose 2.6 percent for the week. Both benchmarks rose to 15-month highs.
Elsewhere in Asia, South Korea's Kospi index fell 2.5 percent to 748.25 this week, its first weekly drop in six.
Samsung Electronics Co led regional declines after some US companies' profit forecasts caused concern growth in corporate earnings will be slower than predicted, crimping demand for Asian goods.
Hong Kong's Hang Seng index rose 0.8 percent to 10,968.42.
Sun Hung Kai Properties Ltd led gains as economic reports indicated growth in the city. The TWSE index in Taiwan gained 2 percent to 5757.91, led by Taiwan Semiconductor Manufacturing Co (TSMC,
Stock benchmarks this week rose in Malaysia, Australia and New Zealand, while Thailand's stock market fell.
Mizuho, Japan's largest bank, surged 31 percent to ¥248,000 this week. UFJ, the nation's No. 4 bank, climbed 22 percent to ¥482,000. Sumitomo Mitsui Financial Group Inc, Japan's second-largest lender, gained 8.4 percent to ¥503,000.
Signs of a global economic recovery have prompted investors worldwide to increase their holdings in Japanese equities, the latest Merrill Lynch survey showed.
The percentage of international investors who intend to boost their holdings of Japanese equities increased to 30 percent in September from 28 percent in August, Masatoshi Kikuchi, a strategist at Merrill Lynch Japan Securities Inc, said in a note to clients.
A net 47 percent of managers were "overweight" in Japanese stocks this month, up from 30 percent in August, the survey found.
Banks have been the best performers on the Topix in the past month, gaining almost a third. Banks such as Mizuho, UFJ and Sumitomo Mitsui have been among the six best-performing stocks on the Nikkei in the same period.
South Korea's Samsung Electron-ics, which gets about a fifth of its sales from US consumers, declined 6.9 percent to 430,000 won this week.
LG Electronics Inc, South Korea's second-largest electronics maker whose exports account for more than 60 percent of sales overseas, dropped 8.9 percent to 60,300 won.
The shares dropped after DuPont Co, the No. 2 US chemical maker, made a forecast for this year's earnings that was at the low end of its previous target. Microchip Technology Inc, which makes computer chips for products such as toasters, said second-quarter profit will be US$0.17 a share, below its July forecast of as much as US$0.18.
Sales abroad account for about 40 percent of South Korea's economy, making export growth crucial to a rebound. The US buys a fifth of South Korea's overseas shipments. The benchmark has surged 47 percent from its 17-month low in March on expectations of a US-led global economic recovery.