Overseas investors are ramping up purchases of Japanese equities on expectations of a recovery in the world's second-largest economy, and their buying volume on a net basis is at a record high for the year, according to data released Thursday by the Finance Ministry and the Tokyo Stock Exchange.

Nonresident investors bought a net 721.9 billion yen worth of Japanese stocks last week, up from 495 billion yen the week before, the Finance Ministry said.

The TSE said investors outside Japan bought a net 687.77 billion yen in Japanese equities from Aug. 8 to 12 on the three bourses, up from 452.82 billion yen the previous week.

Last week's buying volume was the biggest since the first week of March 2004, when overseas investors bought a record net 967.83 billion yen, according to the bourse.

Both the ministry and the TSE said foreign investors remained net stock buyers for the ninth straight week in the reporting week.

Nonresident investors were said to have contributed to an increase of roughly 500 points to a four-year high on the Nikkei average last week.

Contrary to the worries of many market participants, foreign investors scooped up Japanese stocks after Prime Minister Junichiro Koizumi called a snap election during the week.

Although the political situation remains uncertain, many of them apparently bought Japanese stocks in the belief that Koizumi's Liberal Democratic Party will emerge victorious in next month's election because his support rate rose after Aug. 8, brokers said.