Foreign investors piled into Japanese assets on Monday, lifting the Nikkei average to a four-year high and boosting the yen, but European share gains lagged as drugmakers felt the fallout from a U.S. legal ruling, Reuters reported. Yields on euro zone government bonds backed off multi-week lows as investors banked some profits from the previous week's rally and slinked away to the sidelines ahead of key German data. Benchmark U.S. crude oil futures held above $65 a barrel, fuelling demand for oil stocks while casting a shadow over an otherwise improved global outlook that has driven money into equities but so far failed to suck the lifeblood out of bonds. Analysts said positive flow dynamics would continue to support bonds with no new issuance due this week but redemption and coupon payments worth about 40 billion euros this month. But some warned of trouble ahead as proof of a stronger global recovery and growing inflation risks emerged and as rising U.S. interest rates neared a tipping point. "In the bigger picture the outlook for bonds still seems set for a more protracted secular bear market...," strategists at Bear Stearns said in a note to clients. The ZEW institute's gauge of investor confidence on Tuesday and the Ifo business confidence index on Thursday are both forecast to rise for a third straight month, providing further evidence of a long overdue recovery in German domestic demand. In Japan, the Nikkei average surged 1.3 percent to 12,452.5 points -- its highest level in more than four years -- as investors bet on a pickup in bank lending after eight years of declines and snapped up financial shares. --more 1340 Local Time 1040 GMT