The Nikkei average climbed 1.27 percent on Tuesday as investors returned to shares of Advantest Corp, Honda Motor Co Ltd and other stocks hit in the previous session's sell-off. Tokyo Star Bank Ltd rose after sources told Reuters that US private equity group Lone Star is auctioning off its roughly $1.4 billion stake in the Japanese lender.
Soon afterwards, the Tokyo Stock Exchange halted trading in the stock, which last traded up 1.6 percent at 375,000 yen. After the market closed, Shinsei Bank said it expected to post a 58 billion yen group net loss for the financial year that just ended, reversing its previous forecast for a 40 billion yen profit.
"The market was oversold on Monday and we are seeing a rebound," said Shinji Igarashi, equity manager at Chuo Securities. "Large-cap technology shares, which have been laggards, are sought after and helping the Nikkei to advance," he added.
The Nikkei climbed 215.64 points to 17,244.05, recouping some of its 1.5 percent loss from Monday. The broad TOPIX index was up 1.30 percent at 1,704.32. Tomomi Yamashita, senior fund manager at Shinkin Asset Management Co Ltd, said the market's upside potential looks limited as Japanese firms are likely to produce conservative profit outlooks when the earnings season kicks off at the end of this month, and investors are also taking a cautious view.
"It's unlikely that the market would post huge gains as fund managers started the new fiscal year with a view that the Japanese stocks would fall as the US economy slows down," he said.
Trade was active, with 2.34 billion shares changing hands on the Tokyo exchange's first section. Advancing shares beat decliners by a ratio of nearly two to one. Chip-equipment maker Advantest rose 3.5 percent to 5,320 yen, recovering from a 1.7 percent loss the previous session. Auto maker Honda added 2.5 percent to 4,150 yen after falling 1.5 percent the previous session.
In the same sector, Isuzu Motors Ltd rose 3.6 percent to 599 yen after HSBC Securities Japan Ltd on Tuesday raised its rating on the stock to "overweight" from "neutral". Nissan Motor Co edged up 0.5 percent and Mitsubishi Motors Corp climbed 0.6 percent after news that the two companies would expand their existing agreement for original equipment manufacturing to include a plan for Nissan to supply vehicles to its partner for the first time. Tyre maker Bridgestone Corp gained 2.8 percent to 2,400 yen as its US unit announced price increases on tyres.