Japanese stocks surged to a four-year high Thursday amid growing optimism about the nation's economic resurgence and confidence that Prime Minister Junichiro Koizumi's push for reforms will succeed. The Nikkei 225 index climbed 1.4 percent to 12,263.32 points, its highest close since since Aug. 7, 2001, when the benchmark closed at 12,319.46 points. When Koizumi on Monday called for snap elections after his prized bill to privatize the postal system was rejected in parliament, initial worries were for just the opposite scenario: cascading Tokyo stock prices and a plunging yen. Instead, the dollar has dropped and the Nikkei has gained nearly 500 points the last four sessions, amid a mixture of upbeat economic signals and optimism about the direction Koizumi is striving to take the country. "It seems the market has big hopes for Koizumi," said Nagayuki Yamagishi, senior strategist at UFJ Tsubasa Securities Co. "There's widespread relief about having averted a massive selloff, especially by foreign investors, after elections were called." Investors are also responding to growing signs that Japan's economy, which has stagnated for more than a decade, is mounting a sustainable recovery. Japan's jobless rate fell to a seven-year low of 4.2 percent in June, and recent figures on machinery orders and industrial production have also been positive. Exports have been strong for some time, but there are signs that domestic consumer spending is also growing a healthy clip. It's no surprise the market is shrugging off any political turmoil because the companies have gone through painful job cuts and reorganizations to achieve profits -- nothing the leadership has handed out, said Junichi Makino, senior economist with Daiwa Institute of Research. "The economy seems to emerging from its standstill," Makino said. Koizumi's bold move to call elections -- and make the postal reform a national voting issue -- seems to have added to investor confidence about the economy and the country in general. Japan's postal service controls the equivalent of $3 trillion in savings and insurance deposits -- in effect, the world's largest bank -- and privatizing that sprawling network could free up the funds for growth-oriented investment for the world's second largest economy. Critics say the postal savings funds have been misused by politicians in Koizumi's ruling Liberal Democratic Party to provide cheap financing to companies with links to their constituencies.Opponents argue that privatization would reduce postal services in rural areas and lead to layoffs among the 400,000 postal system workers. They also say the new, giant bank would drive private financial institutions out of business. Several members of Koizumi's own ruling party turned against him to side with the opposition and defeated the bills in the Diet's upper house Monday, prompting an outraged Koizumi to call elections and put the issue before the Japanese people. The public seems impressed. An opinion poll published Thursday in Japan's top business daily Nihon Keizai Shimbun showed support for Koizumi's Cabinet rose to 47 percent from 43 percent in a similar survey in July, and 47 percent of the respondents backed privatizing the postal system, vs. 35 percent opposed. Earlier this week, several other newspaper surveys showed similar results. It seems that many investors are predicting Koizumi to emerge triumphant, says Yasuo Yamamoto, senior economist at Mizuho Research Institute in Tokyo. "That's a plus for the market because of the assurance that reforms will continue," he said.