Japan's Nikkei rose two percent on Monday to a five-week closing high as shipping, steel and auto stocks jumped amid broad buying after a capital spending survey boosted optimism that economic growth figures will be revised up.
Fears that US jobs data would be soft for a third straight month in August proved unfounded, also helping sentiment.
And pain induced by Intel Corp's disappointing earnings outlook last week receded, with even chip-related stocks such as Nikon Corp scrambling to higher ground after falling in the morning session.
"The corporate capital spending survey that came out this morning was positive, improving market sentiment, and optimism is growing that overseas markets will perform well later today," said Takahiko Murai, general manager at Nozomi Securities.
The Nikkei average gained 2.01 percent or 221.88 points to 11,244.37, it highest close since July 30 and its biggest one-day advance since June 16. The rise more than erased its 1.67 percent loss for last week.
The broader TOPIX index added 1.64 percent to reach 1,143.04.
The Finance Ministry survey, issued before the opening, showed Japanese firms lifted spending on plant and equipment by 10.7 percent in April-June from the same quarter last year.
Analysts predicted the healthy number would prompt a rise in gross domestic product (GDP) data for the quarter when a revised figure is issued on Friday, and some investors said the outlook for GDP would dominate the market all week.
"If a consensus grows that there is going to be a big revision then there may be some more room for upward momentum," said Yoshihisa Okamoto, senior vice president at Fuji Investment Management.
"But if it's only a small revision then there'll be some lingering concerns about the health of the economy."
All sectors made gains but it was "old economy" stocks that found themselves most in favour.
Shipping firms steamed ahead after the Nihon Keizai newspaper said on Saturday that they were likely to raise container rates by 10-20 percent on October 1 due to strong demand from China and the United States.
Third-ranked Kawasaki Kisen Kaisha Ltd, a market favourite over the past week, and second-ranked Mitsui 0.S.K Lines Ltd hit new year-to-date highs.
Kawasaki Kisen jumped 4.4 percent to 734 yen, Mitsui O.S.K. surged 3.1 percent to 659 and Nippon Yusen KK, Japan's largest shipping company, rose 3.5 percent to 570.
Sumitomo Metal Industries Ltd, Japan's third-largest steel maker, jumped 5.47 percent to 135 yen after the Nihon Keizai said the company was raising its forecast for full-year group pre-tax profit by more than 40 percent. Japan's largest steel maker, Nippon Steel Corp, put on 2.8 percent to 258.
Honda Motor Co led gains among auto makers, revving up 3.62 percent to 5,440 yen.
Toyota Motor Corp, the world's second-largest car maker which unveiled on Monday a $461 million joint venture in south China to make its Camry sedan, drove 1.66 percent higher to 4,280.
Advances in technology shares were more modest, with most under-performing the market although TDK Corp, the world's biggest maker of hard disk drive heads, added 2.9 percent to hit 7,360 yen. Office equipment maker Canon Inc finished up 2.33 percent at 5,270.
Camera and chip-equipment maker Nikon closed 0.88 percent higher at 1,026 yen despite sliding earlier on a rating cut from Goldman Sachs that cited Intel's weaker capital spending outlook.
Advancers trounced decliners by 1,342 to 199 on the first section of the Tokyo Stock Exchange.
Among the Nikkei 225, only three stocks lost ground - watch maker Casio Computer Co, game software developer Konami Corp and Sharp Corp, the world's largest maker of liquid crystal display televisions.
Trade volume increased with 1.8 billion shares changing hands compared with 1.53 billion on Friday.
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