Data from the finance ministry showed that net foreign purchases of Japanese stocks last week were at ¥473.4 billion (US$3.26 billion), which also marked the 11th successive week of foreign inflow into the equity market.

Japanese stocks have so far received approximately ¥7.34 trillion worth of cross-border inflows this quarter, keeping them on track to draw the largest quarterly sum in two years.

The Nikkei share average reached a four-month high of 38,885.15 on Tuesday amid hopes of progress in corporate reforms.

A Bank of America’s Asia fund manager survey this week showed that Japan was its most favoured market in the region.

Meanwhile, safe-haven demand following an escalation in tensions in the Middle East boosted the purchase of Japanese government bonds.

Foreigners bought ¥434.5 billion worth of long-term Japanese bonds, their third weekly net purchase in a row.

They also pumped in a net ¥1.03 billion into short-term bills, the biggest amount in eight weeks.

At the same time, Japanese selling in foreign equities eased to a five-week low of ¥84.5 billion during the week.

Japanese investors, however, snapped up a robust ¥1.57 trillion worth of long-term foreign bonds in their largest weekly net purchase since May 17.

They also added a minor ¥15.6 billion worth of short-term instruments.