Nikkei at Multi-Year Highs as Yen Nears 100 Handle

Japan's Nikkei closed its highest level in almost five years on Monday as the yen weakened to within striking distance of the key 100-level against the greenback, while other Asian stock markets rose after world equity markets rebounded last week from a sharp sell-off.

The Nikkei 225 rallied as much as 2 percent to hover at the 13,600 level and Australia's benchmark S&P ASX 200 ticked up 0.7 percent. South Korea's Kospi closed above the 1,910 mark but the Shanghai Composite retreated from a near three-week high hit on Friday.

The yen's descent to 99 per dollar was spurred after the Group of 20 (G-20) nations over the weekend refrained from criticizing Japan's stimulus program, giving the Bank of Japan the green light to go ahead with its currency depreciation plan.

"Traders were happy to hear this support, or at least the lack of an attack, on what had been seen as the aggressive policy at the heart of Abenomics," said Jason Hughes of CMC Markets in a note.

ASX 200
CNBC 100

Nikkei Up 1.9%

Retail trade and electrical exporter stocks were the greatest beneficiaries of the yen's decline. Retailers like Isetan and Takashimaya jumped nearly 4 percent while Oki Electric soared 8 percent.

"What you're seeing internally in Japan is a shift from government bond yields into the Nikkei because equities are trading quite well," said Richard Yetsenga, head of global markets research at ANZ. "So, the dynamic driving the yen is quite different. It is going to be a weak currency but you're not going to see loads of yen carry trade related outflows."

(Read More: Close, Yet So Far: Yen Takes Another Stab at 100)

Shares of Mitsui Engineering surged 13 percent after the Nikkei newspaper reported that the company plans to start merger talks with Kawasaki Heavy.

Insurers Hurt Shanghai

Mainland shares corrected from last week's near three-week high of 2,250 to close at 2,243 after insurers were hard hit on rising death tolls from the bird flu outbreak and an earthquake in the Sichuan province over the weekend.

New China Life Insurance, China Life Insurance and China Pacific Insurance all fell over 2 percent each.

Sydney Lingers at 4,960

Australian resource stocks edged up after gold and oil prices stabilized with OceanaGold leading gains by 7 percent. The S&P ASX 200 was Asia's worst performer last week, losing 1.6 percent due to the recent sell-off in commodities.

However, Oz Minerals slumped nearly 10 percent after the mining firm downgraded its 2013 copper production forecast.

"The stabilization in commodities over the weekend should see some order restored to the materials sector, however, after last week's gyrations, holding any momentum may be short lived," said Evan Lucas, market strategist, IG Markets in a note.

Techs Lift Kospi

Tech plays were in focus ahead of panel maker LG Display's earnings after the market close. The firm is the first major tech firm to report and may set the tone for other Apple suppliers. Its shares were higher by 2 percent.

Samsung Electronics rose nearly 2 percent while LG Electronics jumped 2.3 percent.

However, automakers extended losses with Kia Motors tumbling 1.5 percent amid worries that the weak yen would hurt the competitive edge of Korean exporters.