Japanese stocks surged to four-year highs and the yen gained Monday as business leaders and investors welcomed the landslide victory by Japan's reform-minded ruling party in weekend parliamentary elections amid growing optimism about the nation's economic prospects. "The win was so much more convincing than expected that the election succeeded in sending a strong message of reform," said Jun Yamamoto, senior economist with Mizuho Research Institute in Tokyo. "The image is all about moving ahead with reforms. And the mood is bright." Prime Minister Junichiro Koizumi's Liberal Democratic Party won a total of 296 seats in the more powerful, 480-seat lower house, public broadcaster NHK reported, well above the 241 seats needed for a majority and the 249 seats it held when Koizumi dissolved the chamber last month. Investors were cheered by the strong support for Koizumi in an election widely seen as a referendum on his reforms for a more market-friendly, efficient economy and a smaller government. The Nikkei 225 index gained 1.6 percent to finish at 12,896.43 points, the highest since June 2001, according to a report of The Associated Press.