Japan's Nikkei share average traded sharply higher on Wednesday, as investors scooped up stocks in relief that the Bank of Japan (BOJ) had not made any changes to short-term rates a day earlier.

The Nikkei was up 2% at 31,475.62 by the midday break, while the broader Topix advanced 2.15% to 2,391.13. Both rose a little further in afternoon trade, lifted by strong earnings and a 100 billion yen ($660.81 million) buyback from Toyota Motor, the world's largest automaker.

"Investors who braced for a hawkish shift in the BOJ's policy were relieved and bought back stocks to cover their short positions," said Shigetoshi Kamada, general manager of the research department at Tachibana Securities.

"The BOJ said it would patiently maintain its ultra-loose policy, which is a sharp contrast to the U.S. Federal Reserve, which tries to contain inflation with monetary tightening."

The BOJ on Tuesday further loosened its grip on long-term interest rates by tweaking its bond yield control policy again, but it kept ultra-low interest rates steady.

An overnight strong finish on Wall street and robust outlook for domestic corporates has also boosted risk appetite, strategists said.

Toyota was up 6% after announcing it more than doubled second-quarter operating profit. Its autoparts affiliates Denso and Aisin both raised their annual profit forecast, and their shares also gained strongly.

All but one of the Tokyo Stock Exchange's 33 industry sub-indexes rose, with the auto and autoparts sector jumping 4.7% to lead the gains.

Bucking the trend, Advantest tanked 6.5% after the chip-testing equipment maker downgraded its full-year operating profit forecast. ($1 = 151.3300 yen) (Reporting by Junko Fujita; Editing by Sonia Cheema and Rashmi Aich)