Tokyo's Nikkei average closed a slow trading day up 1.5 percent on Wednesday after a jump in US stocks encouraged investors to buy back techs including Hoya Corp, reversing the previous day's falls.
Solid results from US firms and moderately upbeat comments by Federal Reserve Chairman Alan Greenspan about the US economy boosted Wall Street and encouraged buyers in Tokyo, helping the Nikkei recover close to the psychologically important 11,500 barrier.
But analysts said the market lacked the impetus to jump much higher, with geopolitical risks, rises in oil prices and concerns about higher interest rates in the United States and China as background factors.
The Nikkei ended up 1.56 percent at 11,433.86, recovering from a seven-week closing low marked the previous day. The broader TOPIX index rose 1.25 percent to 1,153.76.
The Nikkei is up 7 percent so far this calendar year, being bolstered by optimism about the country's economic recovery and in stark contrast with negative performances in US and other major stock indices.
Underscoring the market's view, Japan's Cabinet Office on Wednesday almost doubled its economic growth forecast for the year ending next March to 3.5 percent, which would be its fastest pace in eight years.
Hoya, a top maker of components used to make chips and liquid crystal displays, rose 4.14 percent in a delayed reaction to record earnings for the April-June quarter that the company posted on Tuesday.
Yahoo Japan Corp jumped 5.99 percent before Japan's top Internet portal announced after the market closed that it had higher-than-expected profit in the latest quarter, helped by its online auction and Web advertising businesses.
Other Japanese technology giants including Sony Corp report results next week.
Trade slowed, with 932 million shares changing hands on the first section, the lowest daily total since July 5. Advancers outnumbered decliners 1,210 to 251.
Apart from general caution ahead of earnings, the lack of visibility in external factors made investors hesitant to trade actively on Wednesday, analysts said.
Among high-tech issues, Tokyo Electron Ltd, the world's second-biggest producer of chip making equipment, gained 4.81 percent to 5,450 yen, after losing 4.59 percent on Tuesday.
Furukawa Electric Co Ltd, the country's top maker of optical fibre, rallied 7.71 percent to 461 yen, cheered by a jump in shares of US rival Corning Inc following its solid earnings and outlook.
Hino's parent Toyota Motor Corp on Tuesday raised group vehicle sales forecast for 2004 by 4 percent to a record 7.39 million units world-wide, with Hino's sales forecast contributing the most to the increase from original targets.
Matsushita Electric Industrial Co Ltd rose 2.43 percent to 1,476 yen after the company said sales of its Panasonic brand electronics in Japan were up 70 percent year-on-year so far in July due to strong demand for flat-panel televisions and DVD recorders ahead of the summer Olympics.