Japanese shares gained Wednesday as the yen strengthened and bond yields climbed on robust wage data, fueling expectations of further Bank of Japan tightening.

The Nikkei 225 rose 0.09%, or 33.11 points, to 38,831.48. The yen hit a seven-week high, while the 10-year government bond yield reached its highest since 2011.

BOJ official Kazuhiro Masaki said rates would rise if inflation trends toward 2% as projected, though policy remains loose to support growth.

Core inflation hit 3% in December, but the central bank prioritizes sustained price trends over short-term moves.

Japan's services sector expanded at its fastest pace in four months in January, with the au Jibun Bank index at 53, driven by stronger demand and hiring.

Export orders rose, though input costs climbed. The composite PMI reached 51.1, the strongest private-sector growth since September, offset by weak manufacturing.

In corporate news, Gunma Bank (TYO:8334) posted a 29% jump in nine-month attributable profit to 31.9 billion yen on a 6.6% rise in ordinary income. EPS climbed to 82.40 yen.

Honda's (TYO:7267) push to take full control of Nissan (TYO:7201) has complicated their planned $58 billion merger, Financial Times reported. Renault, a key Nissan shareholder, is pushing for a higher premium. A decision is now expected in mid-February.

Japan Hotel REIT (TYO:8985) denied reports it is acquiring the Hyatt Regency Tokyo from KKR & Co. and Gaw Capital Partners for over 100 billion yen. Bloomberg earlier reported the potential deal, citing record tourism and a weak yen boosting hotel demand.