By Sarah Turner, MarketWatch

SYDNEY (MarketWatch) -- Asian stocks gained ground on Wednesday, from Tokyo to Sydney, a day after the Dow industrials hit an all-time high, with central-bank policy helping spur equity buying.

Adding to a near-2% gain made so far this week on optimism for another round of policy loosening to lift the Japanese economy out of deflation, the Nikkei Stock Average rallied to finish with a 2.1% gain to end at its highest level in 4-1/2 years.

In Hong Kong, the Hang Seng Index sat 0.9% higher in late afternoon trades, while the Shanghai Composite Index was up 0.7% on the Chinese mainland, with the annual session of the National People's Congress in full swing.

On Tuesday, China's departing premier announced an unchanged 7.5% gross-domestic-product growth target for China in 2013.

In other Asian economic news, data out Wednesday showed that the Australian economy grew at 0.6% in the fourth quarter of 2012, meeting economist expectations, for annual growth of 3.1%. The growth was helped by a swathe of interest-rate cuts made last year Read: Australia's economy grows on exports, rate cuts

Australia's S&P/ASX 200 index finished with a 0.8% improvement, while South Korea's Kospi added 0.2%.

Asia's gains came after Wall Street rallied Tuesday, boosted by U.S. service-sector data. Read: U.S. stock rally lifts Dow to record finish

"The medium-term picture still looks favorable, in our opinion. Although we foresee little stimulus from the macro side in the first half of 2013, we see limited potential for downside surprises, unlike in 2012. At the same time, central banks are being very accommodative and are acting as a put option for the capital markets," said Crédit Suisse Asset Management emerging-markets strategist Adrian Zuercher.

"The dearth of investment alternatives in an environment of record-low market interest rates by now across almost every fixed-income asset segment remains the most compelling argument in favor of stocks. The prevailing 'yield drought' is veritably forcing investors into stocks," Zuercher said.

While the Dow industrials (DJI) ended at a record, most Asia benchmarks have a long way to go to match that performance. The Nikkei Average, for example, remains around 70% off its record closing high of 38,915.87, hit in December 1989, just ahead of the bubble bursting that resulted in Japan's "Lost Decade."

Other Asian benchmarks also well shy of their all-time records included the Kospi -- around 10% off its 2,228.96 record close reached May 2, 2011 -- and the Australian market -- around 25% off its 6,828.71 record on Nov. 1, 2007.

Chinese markets are also well below all-time highs. Hong Kong reached its record of 31,638.22 on Oct. 30, 2007, while Shanghai's highest ever close of 6,092.06 was hit Oct. 16 of the same year.

Major movers

Wednesday saw Hong Kong-listed banks gain, with Agricultural Bank of China Ltd (ACGBF) up 3.1%, and Industrial & Commercial Bank of China Ltd. (IDCBY) advancing 1.9%.

Shares of Standard Chartered PLC rose 1.7% following on from gains in London after the emerging-markets-focused bank posted a 10th straight year of record profit. Read: Standard Chartered: Good '13 start after flat '12

On the Chinese mainland, property stocks recovered some ground lost earlier this week, with China Vanke Co. up 2.3% in late trading in Shenzhen.

Shanghai-listed bank stocks were mixed, however, with Bank of China Ltd. (BAC) down 0.3%, and China Citic Bank Corp. losing 0.2% ahead of the close.

Deutsche Bank analysts said that they are neutral on Chinese financials, given credit growth concerns, even though the sector -- along with Japanese banks -- has historically been one of the best performers when global and domestic yield curves steepen.

Steeper local yield curves should become the "new norm," given a stronger global economy and a reluctance among central banks to raise rates, with the move likely to broadly benefit Asian financials, said the analysts.

Japan has been doing what it can to encourage inflation in the country, and the Bank of Japan was set Thursday to issue its first policy decision under a new governor, considered more dovish than his predecessor.

Financials have put in some of the best performances in Tokyo recently, and the sector gained again on Wednesday, with Nomura Holdings Inc. (NMR) climbing 1.4%, and insurer Tokio Marine Holdings Inc. (TKOMF) finishing higher by 3.5%.

Retailers were also strong, as heavyweight Fast Retailing Co. (FRCOY) built on gains made in the previous session to trade up another 8.1%.

Sharp Corp. (SHCAF) soared to close 14.1% higher following several Japanese news reports that South Korea's Samsung Electronics Co. (SSNLF) would invest some 10 billion yen ($107 million) in the struggling Japanese electronics firm. Read: Samsung Electronics may buy stake in Japan's Sharp

Gains spread through much of the rest of the Japanese technology sector, with Pioneer Corp. (6773.TO) jumping .64%, and NEC Corp. climbing 3.9%.

Samsung Electronics shares ended 0.7% higher in South Korea amid reports of the Sharp investment, while rival chip maker SK Hynix Inc. (HXSCL) climbed 3.7%.

Relatively high-yielding Australian banks were advancing again on Wednesday, with Australia & New Zealand Banking Group Ltd. (ANEWF) improving by 1.3%, and National Australia Bank Ltd. (NAUBF) up 0.8% following a report it plans almost $1 billion in cost cuts. Read: Australia's NAB reportedly targeting cost cuts

Subscribe to WSJ: http://online.wsj.com?mod=djnwires