Japan stocks hit over 1-year peak

Japanese stocks rose to their highest level in more than a year on Tuesday, tracking Wall Street's run to a record closing high on renewed optimism over the US-China interim trade deal.

The Nikkei index settled 0.47% higher at 24,066.12, with the healthcare and industrials sectors leading the gains. Earlier in the session, the benchmark index reached its highest level since Oct. 4, 2018. It is up 19.67% so far this year.

US National Economic Council Director Larry Kudlow on Monday said the "phase one" deal was "absolutely completed" and reiterated comments made by US Trade Representative Robert Lighthizer that US exports to China would double in exchange for a reduction in US tariffs.

Chinese officials have been more cautious, emphasising that the trade dispute has not been completely settled.

Investors are betting that the deal, which is expected to be signed in the first week of January, will finally de-escalate the tariff spat that had dragged on for more than a year, making it the biggest risk to the global economic outlook.

The de-escalation of the dispute is also a positive for earnings of Japanese exporters.

"Japan took the lead from New York stocks. In addition, there are signs that the US manufacturing sector is turning around, which is a positive for Japanese makers of electronic parts, heavy machinery, and materials," said Kiyoshi Ishigane, chief fund manager at Mitsubishi UFJ Kokusai Asset Management Co in Tokyo.

"US-China relations could easily sour again in the future, but for now the trade deal is being taken as a positive."

There were 137 advancers on the Nikkei index against 82 decliners on Tuesday.

The top percentage gainers in the index were chemicals maker Tosoh Corp, up 5.21%, followed by healthcare firm M3 Inc, up by 4.7%, and oil producer Inpex Corp, which gained 3.97%.

The biggest percentage losers were ad agency Dentsu Inc, down 6.28%, followed by ship builder Mitsui E&S Holdings Co Ltd, down 3%, and video game maker Bandai Namco Holdings Inc, which shed 2.39%. The broader Topix index rose 0.59% to 1,747.20, also reaching the highest since Oct. 10, 2018.

The volume of shares traded on the Tokyo Stock Exchange's main board was 1.29 billion, compared to the average of 1.24 billion shares in the past 30 days.