Tokyo stocks closed higher Monday, briefly lifting Japan's benchmark Nikkei index above the 14,000 line for the first time in about two months, as optimism prevailed among market participants that the worst of the credit crunch is over.

The 225-issue Nikkei Stock Average gained 30.90 points, or 0.22 percent, from Friday to 13,894.37, after briefly hitting 14,003.28 in the morning.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange was up 21.84 points, or 1.63 percent, to 1,361.75.

Gains were led by banking, consumer finance and real estate issues.

Tokyo stocks got off to a firm start with eased credit fears lifting banking and securities issues in particular.

''There is a view that the worst of the financial turmoil in the United States is over and concerns over the dollar's depreciation are receding,'' said Hiroichi Nishi, equities chief at Nikko Cordial Securities Inc.

The Nikkei advanced about 140 points at midmorning, surpassing the 14,000 line for the first time since Feb. 27.

But the index soon fell back below the line and briefly traded in negative territory in the afternoon as investors turned to selling for quick profits ahead of a national holiday Tuesday.

The Topix, meanwhile, stayed in positive territory throughout the day on sharp gains in banking issues, which have a major influence on the index.

Toshikazu Horiuchi, an equity strategist at Cosmo Securities, said the current firmness in the Tokyo stock market reflects market players' move away from extreme pessimism about the course of the U.S. economy following recent stronger-than-expected corporate earnings in the United States.

Tokyo stocks were also lifted by expectations prior to a policy meeting of the U.S. Federal Reserve on Tuesday and Wednesday that the Fed will suggest a pause in rate cuts in a post-meeting statement, brokers said.

Although stock markets usually welcome rate cuts as boosting the economy, they would take such a suggestion by the U.S. central bank as a positive sign regarding the U.S. economy, they added.

On the First Section, advancing issues outnumbered declining issues 1,154 to 478, with 87 others remaining unchanged.

Value leader Mizuho Financial Group advanced 46,000 yen, or nearly 10 percent, to 529,000 yen, Sumitomo Mitsui Financial Group surged 75,000 yen, or over 9 percent, to 896,000 yen and volume leader Mitsubishi UFJ Financial Group was up 104 yen, or 10 percent, to 1,144 yen.

Blue-chip exporters like Toyota Motor and Sony also got a boost. Toyota Motor grew 20 yen, or 0.38 percent, to 5,310 yen, while Sony increased 70 yen, or nearly 2 percent, to 4,850 yen.

Among companies that announced earnings reports Friday, Honda Motor rose 100 yen, or 3 percent, to 3,430 yen. Japan's second largest automaker said its group sales and profits in all categories hit record-highs in the business year through March 31.

Matsushita Electric Industrial rose 15 yen, or nearly 1 percent, to 2,135 yen, and Sanyo Electric was up 16 yen, or nearly 7 percent, to 254 yen, following a report in the Yomiuri Shimbun, a Japanese daily, that the two firms are considering a business and capital tie-up. Both Sanyo and Matsushita flatly denied the report.

Major decliners included precision machinery, as well as information and communication issues.

Bucking the upward trend, NTT DoCoMo fell 6,000 yen, or nearly 4 percent, to 151,000 yen, after the cellphone service provider said Friday its revenues in the year that ended March 31 fell.

Sharp decreased 30 yen, or nearly 2 percent, to 1,767 yen, after it reported Friday that its operating profit in the fiscal year ended March 31 fell for the first time in six years.

Another factor that prevented the Nikkei from holding on to its gains above 14,000 was concern among Japanese investors that foreign investors, who account for about 60 percent of daily trading volume on the TSE, may be discouraged to invest in Japanese stocks amid uncertainty over the country's political situation, brokers said.

The ruling Liberal Democratic Party suffered a huge defeat against the main opposition Democratic Party of Japan in Sunday's House of Representatives by-election in Yamaguchi Prefecture, raising doubts about Prime Minister Yasuo Fukuda's leadership at a crucial stage in the parties' tug-of-war over gasoline and other road-related tax surcharges.

Trading volume on the main section came to 2,037.40 million shares, up from Friday's 1,845.10 million.

The TSE's Second Section index was up 28.61 points, or 1.01 percent, to 2,853.14 on a volume of 60.48 million shares. On the Osaka Securities Exchange, the near-term June Nikkei 225 index futures contract gained 60 points to 13,890.