The Nikkei share average rose 0.80 percent on Monday as property firms such as Mitsui Fudosan Co Ltd gained on a report that a measure of national land prices turned positive for the first time in 15 years.
Sony Corp and some other technology stocks were firm following rises on Wall Street, although gains were curbed by concerns about the yen's impact on their earnings.
Tokyo markets were closed from Wednesday to Friday last week for the Golden Week string of public holidays. During that time, the three main US stock indexes all advanced, with the Dow Jones industrial average finishing at a six-year high.
"The Japanese market tried to catch up with other major markets that have posted good advances. But investors stopped short of pushing further up because of the yen," said Yoshinori Nagano, chief strategist at Daiwa Asset Management.
The Nikkei rose 137.90 points to 17,291.67. The TOPIX index gained 1.03 percent, or 17.85 points, to 1,755.03.
Property stocks led the gains with the real estate sector rising 4.64 percent, the best performer.
Mitsui Fudosan, Japan's largest property developer, surged 6.8 percent to 2,690 yen after Bank of Japan data showed that the weighted average of national land prices increased 1.4 percent in the year to January 1, the first positive reading since 1991.
Nagano of Daiwa Asset Management said the news was positive for the sector. "If only the land prices were up, that would raise some concerns about a possible asset bubble. But rents are going up, so rises in land prices are actually a healthy sign," he said.
Mitsubishi Estate Co Ltd gained 3.2 percent to 2,565 yen. In the telecom sector, Japan's largest telecom operator Nippon Telegraph and Telephone Corp advanced 4.3 percent to 532,000 yen after business daily Nihon Keizai said the company is likely to raise its annual dividend payout for the current year by as much as 50 percent. NTT rival KDDI Corp rose 1.6 percent to 747,000 yen after brokerage Mizuho Securities raised its target share price for the issue to 833,000 yen from 826,000 yen, citing the strength of the company's mobile business.
In the technology sector, Sony was up 2 percent at 5,660 yen and Toshiba Corp rose 0.7 percent to 765 yen. A notable loser was Pentax Corp which plunged 12.5 percent to 699 yen, its largest percentage drop in nearly two years. It said it missed profit targets for last business year due mainly to tough competition in the endoscope market.
Some auto and exporters such as Canon Inc declined as the dollar slid nearly 1 percent on Monday and hit an eight-month low against the yen. A stronger yen is a minus for exporters as it reduces profits when earnings from abroad are brought home.
Canon, which generates about three-quarters of sales outside Japan, dropped 2.1 percent to 8,740 yen and Toyota Motor Corp sagged 0.6 percent to 6,760 yen.
Analysts said gains in US stocks on hopes for a possible pause in US interest rate hikes suggest that the Japanese market may be set for an upward trend.
"The Nikkei average will likely aim for new highs. The yen has strengthened to 111 yen, but that level should not be a problem," said Yoshihisa Okamoto, senior vice president at Fuji Investment Management.
Tsutomu Yamada, a market analyst at Kabu.com Securities Co, said the market is closely watching the Federal Reserve meeting on Wednesday to see how the dollar/yen rate reacts. Trade volume rose with 1.89 billion shares changing hands, compared with 1.44 billion shares in the previous session last Tuesday. Advancers outnumbered decliners 977 to 613.