TOKYO (AP) _ The dollar was lower against the yen Wednesday on hopes economic reform will continue in Japan despite political turmoil. Japanese stocks rose moderately.

The dollar bought 140.92 yen in afternoon trading, down 0.44 yen from late Tuesday in Tokyo but above its late New York rate of 140.02 yen overnight.

The yen strengthened overnight on optimism that Japan remains committed to reforms to buoy its economy, despite the ruling party's crushing defeat in Sunday's elections for the upper house of Parliament.

But the dollar crept higher most of the day in Tokyo amid uncertainties about who will be chosen to succeed outgoing Prime Minister Ryutaro Hashimoto. Hashimoto announced his resignation on Monday after the electoral defeat.

On the stock market, share prices continued to advance as investors were encouraged by a record high close on Wall Street.

The 225-issue Nikkei Stock Average gained 125.23 points, or 0.76 percent, to close at 16,614.14. On Tuesday, the Nikkei index closed up 128.52 points, or 0.79 percent.

On Wall Street, the Dow Jones industrial average closed at 9,245.54, up 149.33 from Monday's close.

Also supporting Tokyo stocks were expectations that the government will work out proposed permanent tax cuts aimed at helping pull Japan out of recession, dealers said.

The broader Tokyo Stock Price Index of all issues listed on the first section rose 8.66 points, or 0.68 percent, to 1,275.31. The TOPIX closed up 10.21 points, or 0.81 percent, the day before.

Trading on the exchange's main section was estimated at 473 million shares, up from 402 million shares Tuesday.

Advances beat declines 635 to 497 while 142 issues were unchanged.

Meanwhile, the yield on the benchmark No. 182 10-year Japanese government bond fell to 1.405 percent from Tuesday's finish of 1.445 percent, driving its price up to 110.38 yen from 110.11 yen.