Japan's Nikkei average gained 2.8 percent on Tuesday, making up ground lost the previous day with exporters such as Canon Inc lifted by a sharp slide in the yen and easing worries about the US economy and consumer spending. Japan's top bank, Mitsubishi UFJ Financial Group, gained more than 4 percent in the broad-based rebound. It is set to report results after the close.
Shares in Square Enix Holdings, a developer of home-use game software, jumped after it beat market expectations with its annual earnings outlook, while Asahi Glass Co surged on a brokerage upgrade. Market analysts said that despite a dip on Monday when a climb in the yen pushed the market lower, Tokyo stocks were in an upward trend after hitting a bottom in March.
"Hopes are growing that the macro economy is gradually recovering. It's clear that the economic free-fall phase is now over," said Junichi Misawa, a senior fund manager at STB Asset Management. "But whether the market can keep this up to try 10,000 or 12,000 and above, for example, will ultimately depend on the degree of improvement in corporate earnings."
The benchmark Nikkei advanced 251.60 points to 9,290.29, making up for a 2.4 percent fall the previous day. It has risen about 32 percent from a 26-year closing low hit in March. The broader Topix added 2.3 percent to 879.76.
The dollar was trading around 96.40 yen in the afternoon after hitting a two-month low near 94.50 the previous day, buoyed by comments from Japanese Vice Finance Minister Kazuyuki Sugimoto that he was watching foreign exchange market moves closely. Investors welcome a weaker yen as it boosts exporters' profits when they are repatriated.
Strong results from US home improvement retailer Lowe's raised hopes the recession is easing, sparking buying of US stocks aligned with economic growth such as banks, energy companies and retailers. But trade was subdued as market analysts said investors were cautious before an array of economic indicators, including US April housing starts later on Tuesday and Japan's first-quarter gross domestic product data due out before the markets open on Wednesday.
Some 2.3 billion shares changed hands on the Tokyo exchange's first section, compared with last week's daily average of 2.5 billion. Advancing stocks outnumbered declining ones by nearly 6 to 1. High-tech shares advanced, also helped by gains in the Philadelphia Semiconductor Index which climbed 3.7 percent.
Advantest Corp shot up 5.8 percent to 1,656 yen and TDK Corp climbed 4.7 percent to 4,420 yen. Canon shares jumped 4.4 percent to 3,290 yen, while Sony Corp rose 3.3 percent to 2,500 yen. Automakers also gained, with Toyota Motor Corp advancing 3.4 percent to 3,680 yen.
Square Enix rose 14.3 percent to 2,100 yen after it forecast operating profit of 25 billion yen for this financial year, double its profit a year earlier and in stark contrast to a consensus for an operating loss of 7.8 billion yen from 18 analysts.
Asahi Glass surged 9.4 percent to 674 yen after the Daiwa Institute of Research raised its rating on the glass maker two notches, citing the company's progress in restructuring and a recovery in earnings from glass used to make liquid crystal displays. Mitsubishi UFJ climbed 4.2 percent to 617 yen and Sumitomo Mitsui Financial Group inched up 0.5 percent to 3,780 yen.
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