A weaker yen helped power Japan’s Nikkei share average to 11-month highs on Thursday, while many energy shares made strong gains after OPEC agreed to cut crude output for the first time since 2008 in order to boost oil prices.

The Organization of the Petroleum Exporting Countries, which accounts for a third of global oil supply, agreed to cut production from next month by over 3 per cent to reduce a supply glut that has kept oil prices subdued.

As oil prices raced higher on the news, the prospect of rising inflation reinforced expectations for increases in US interest rates, drawing investors to the dollar, which struck a 9 1/2-month high above 114 yen.

“There seems to be a trend lately of selling the yen, and buying Nikkei futures,” said Norihito Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley.

“We have to see how far the yen falls against the dollar before we can guess how far the Nikkei can rise,” he added.

“It’s a very emotionally-driven market right now, chasing overseas factors, with everyone trying to gauge how strong the momentum is.”

The Nikkei was up 2.3 per cent at the end of morning trading at 18,722.38, while the broader Topix added 1.9 per cent to 1,496.80.

The JPX-Nikkei Index 400 gained 1.9 per cent to13,435.89.

Oil-exploration stocks outperformed, with the Tokyo Stock Exchange mining sector sub-index surging 10.3 per cent.

Inpex Corp rose 11 per cent, marking its biggest intraday gain since March 2011, while Japan Petroleum Exploration Co jumped 13 per cent.

Engineering company JGC Corp rose 8.9 per cent after the Nikkei reported that company received an order from Sumitomo Chemical Co to build a plant to make feed additives.

Daido Steel Co Ltd rose 4.1 per cent after it said it will buy back up to 2 million of its shares, worth up to 1 billion yen ($8.75 million).

The market shrugged off data released early on Thursday that showed Japanese companies cut spending on plant and equipment in July-September by 1.3 per cent from the same period last year, the first annual decline since early 2013, a sign capital expenditures and corporate confidence remain lacklustre.

Bank of Japan board member Makoto Sakurai said in a speech on Thursday that the government and companies should play a larger role in pulling Japan’s economy out of subdued inflation and growth by raising wages and promoting innovation. ($1 = 114.3500 yen)

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