Japanese markets bucked the weak trend, long-term bonds tumbled, and the yen touched a fresh low since early August against the U.S. dollar as pro-business leader Sanae Takaichi's victory in the ruling Liberal Democratic Party leadership race stoked bets on a revival in big spending and loose monetary policy.

The Nikkei average jumped 4.75 percent to a record high of 47,944.76 while the broader Topix index settled 3.10 higher at 3,226.06.

Defense-related shares topped the gainers list, with Kawasaki Heavy Industries climbing 9.4 percent and Mitsubishi Heavy Industries rallying 11.2 percent.

Automakers Nissan Motor, Honda and Toyota surged 4-5 percent after reports emerged that U.S. President Donald Trump is considering significant tariff relief for U.S. auto production.

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