Japan's Nikkei average jumped 3.3 percent to hit a 2-1/2-month closing high on Tuesday as Mitsubishi UFJ Financial Group (8306.T) and other banks soared on hopes for an upturn in the U.S. banking sector, while a weaker yen lifted exporters. But some market analysts said the Nikkei appeared overheated after ending Tuesday about 13 percent above its 25-day moving average. The Nikkei is up 20 percent from a 26-year closing low hit on March 10. U.S. stocks leapt about 7 percent on Monday after Washington gave details of its plan to purge toxic assets from bank balance sheets, fuelling optimism about a revival in bank lending and driving double-digit gains in U.S. financial shares. .N "The key point of the U.S. plan is that money may start flowing again, helped by a push by the government. That sparked hopes that the financial system will stabilize," said Masaru Hamasaki, senior strategist at Toyota Asset Management. The benchmark Nikkei .N225 ended up 272.77 points at 8,488.30, its highest close since January 9. Although some said the average has climbed too fast, other traders said the market may receive support in the near-term as institutional investors such as pension funds are likely to buy to prop up stock prices as the fiscal year-end approaches. Many Japanese firms close their books on March 31. Share prices also got help from Finance Minister Kaoru Yosano, who said on Tuesday that the government would extend its ban on naked short-selling of stocks and would extend rules on company share buybacks until the end of July in view of current Japanese stock market conditions. "Yosano's comments are a positive factor for stocks, even though some have already speculated the government would give extensions," said Shinji Igarashi, equity manager in the sales department at Chuo Securities. The Dow Jones industrial average .DJI jumped 6.8 percent on Monday, also helped by an unexpected rise in housing sales, seen as a key factor in spurring an economic recovery. .N Tokyo's broader Topix added 2.7 percent to 812.72. Trade was active on the Tokyo exchange's first section, with 2.6 billion shares changing hands, compared with last week's daily average of 2.2 billion. Advancid Sumitomo Mitsui Financial Group (8316.T), the third-ranked bank, gained 3.2 percent to 3,920 yen. Exporters gained as the yen tumbled on Tuesday against other currencies. Investors welcome a weaker yen as it boosts exporters' profits when repatriated. Canon Inc (7751.T) jumped 4.4 percent to 2,880 yen, while Toyota Motor Corp (7203.T) advanced 3.6 percent to 3,160 yen, even after a newspaper reported that weaker-than-expected sales had prompted the automaker to revise down its production plans in Japan in May.

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