The benchmark Nikkei-225 index of the Tokyo Stock Exchange gained 87.07 points to 9,724.21. The Topix index of all first-section issues added 0.65 percent or 5.39 points to 832.14.

The market opened higher following an upturn on Wall Street overnight and reported merger talks between Japanese manufacturing giants Hitachi and Mitsubishi Heavy Industries.

Share prices got a further boost midmorning as the Japanese government intervened in currency markets in a bid to counter speculator-driven rises of the yen that had pushed the unit near its post-war high against the dollar.

"The market is breathing a sigh of relief for now, but the yen remains firm and investors are expecting more rounds of intervention later in the day," said Takuya Yamada, senior portfolio manager of ITC Investment Partners.

The dollar was at 78.73 yen in Tokyo late morning, up from 76.99 earlier. The Japanese unit also fell against the euro, with the single currency fetching 112.56 from an earlier 110.45.

Major exporters rose, with Toyota Motor up 1.44 percent at 3,165 yen and Sony up 0.41 percent at 1,931.

US stocks closed higher on Wednesday, as the Dow Jones Industrial Average ended an eight-day losing streak and markets regained some ground lost in Tuesday's brutal sell-off.

The Dow average of 30 blue-chip stocks rose 29.82 points (0.25 percent) to close at 11,896.44. Technology shares rose, as did Mastercard, which reported better-than-expected second-quarter earnings.

Shares in Mitsubishi Heavy jumped 4.29 percent to 364 yen and Hitachi soared 3.23 percent to 478 yen following reports that they have agreed to start merger talks, aiming to create a new entity in early 2013.

The two companies have combined annual sales of more than 12 trillion yen ($155 billion) and the move would create a Japanese industrial behemoth second only to Toyota Motor in revenue terms.

Copyright AFP (Agence France-Presse), 2011