Japan's economy staged an encouraging comeback in the first quarter, expanding at its fastest pace in a year, data showed on Wednesday.
Gross domestic product (GDP) expanded an annualized 2.4 percent compared with the previous quarter, beating the 1.5 percent print expected in a Reuters poll. In the October-December quarter, the economy expanded 1.5 percent on-quarter after contracting in both the second and third quarters of 2014.
On a quarter-on-quarter basis, GDP grew 0.6 percent in the first three months of this year, more than a 0.4 percent increase expected in a Reuters poll.
The news helped to spur the Nikkei Average to a near one-month high of 20,207. The yen strengthened initially, but fell back to two-month lows of 120.93 against the dollar on strong U.S. data.
Helping to drive the GDP advance was private consumption, long a sticking point in the country's attempts at an economic recovery, grew 0.4 percent from the previous quarter, compared with 0.2 percent forecast in a Reuters poll.
That may mark a reversal as Japanese households, hit by a tax hike, lower real wages and higher prices, had been cutting back on spending.
"Consumption ought to accelerate from here. Think about it: if you've got 2.3 percent growth in wages, you've got a very, very tight job market. So everyone knows, 'they can't fire me, they got no one to replace me with,'" Nicholas Smith, a Japan strategist at CLSA, told CNBC. "I've placed a lot of weight in my portfolio in retail and that's been vindicated so far this year. It looks as if the story is very much on track."