Dec. 28 (Bloomberg) -- Japanese stocks advanced, sending the Nikkei 225 Stock Average to a five-month high. Banks such as Mizuho Financial Group Inc. gained after a government report showed industrial production rose for the first month in three, providing evidence that growth in the world's second-largest economy will be sustained.

The Nikkei gained 61.78, or 0.5 percent, to 11,424.13, the highest since July 21, at the 3 p.m. close in Tokyo. The Topix index added 5.58, or 0.5 percent, to 1140.19. Banks accounted for most of the gain on optimism economic growth will spur lending.

``The economic outlook seems to be better than we had thought,'' said Masaki Iso, who oversees the equivalent of $7.6 billion as head of Japanese equities at Yasuda Asset Management Co. in Tokyo. ``The gain in bank stocks is strong evidence investors are more confident about the economy.''

Iso said he may raise his shareholdings in banks.

Consumer-electronics makers including Matsushita Electric Industrial Co. rose after U.S. retailers Amazon.com Inc. and Wal- Mart Stores Inc. reported an increase in holiday sales.

Stocks also got a boost after oil prices plunged by almost $3 a barrel. Japan imports almost all of its oil.

To contact the reporters on this story: Michael Tsang in Tokyo at mtsang1@bloomberg.net.

Last Updated: December 28, 2004 01:16 EST