Japanese stocks achieve their best weekly performance in 12 weeks.

Japanese stocks recorded their best weekly performance in 13 weeks by the end of trading for the week ending December 27, with the Nikkei 225 index achieving a weekly gain of 4.08%.

At the end of trading on Friday, the Nikkei index rose by 1.80% or 713.10 points, closing at 40,280.94 points, while the Topix index jumped by 3.69% to 2,801.82 points.

The strong gains in Japanese stock indices were fueled by increased market optimism about the recovery of economic activity in Japan, after official statistics showed retail sales in Japan grew by 2.8% in November, better than expectations which predicted a growth of only 1.5%.

At the same time, data revealed a contraction in industrial production in Japan by 2.3%, which was better than expectations that forecasted a contraction of around 3.4%, reflecting the recovery of economic conditions in the country.

On the other hand, reports indicated that the Japanese government is discussing the issuance of a record budget of 115 trillion yen for the new fiscal year, set to begin in April, with increased spending on defense.