Japan's Nikkei average rose 1.5 percent on Wednesday to post a six-week closing high, with blue chip shares such as Sony Corp driving gains after a $15 billion share buyback plan announced by IBM boosted investor confidence.
Mizuho Financial Group and other financials also gained on growing relief about the stability of US bond insurers after Moody's affirmed its credit rating on MBIA Inc, while higher oil prices boosted energy shares.
Another notable stock was heavy machinery maker IHI Corp It fell 6.4 percent to 218 yen after a newspaper said top executives knew of losses at a key division before it issued corporate bonds last year, a report the company denied.
Fujio Ando, a senior managing director at Chibagin Asset Management, said the market appears to be on a recovery track but he still expects more fluctuations. "I will be cautious into early next month as we expect to see a string of indicators such as US jobs data ... and Japanese GDP figures, which could possibly be revised down," he said.
"At present, many investors expect the US economy to regain ground in October-December this year, but if that falls through, we should expect a further spike down in markets."
For clues to the Federal Reserve's outlook on rates, investors were also awaiting testimony from Fed Chairman Ben Bernanke later in the day to the House of Representatives Financial Services Committee. The Nikkei average rose 1.5 percent or 206.58 points to 14,031.30, the highest close since January 11.
The broader TOPIX index added 1.3 percent or 17.05 points to 1,364.52. Ken Masuda, a senior equities dealer at Shinko Securities, said news of IBM's share buyback and stabilising bond insurers drove the market higher, but gains will likely be limited at around 14,500 as the market has recently been severely battered.
Blue chip exporters climbed, with Sony up 2.3 percent at 5,320 yen, Kyocera Corp climbing 2.2 percent to 8,950 yen and Advantest Corp rising 2.6 percent to 2,800 yen.
Growing relief helped lead financials higher, with Mizuho up 3.3 percent at 471,000 yen and Sumitomo Mitsui Financial Group gaining 2 percent to 815,000 yen. Mitsubishi UFJ Financial Group rose 1.2 percent to 997 yen. Japan's largest non-life insurer, Millea Holdings Inc, added 1.5 percent to 4,140 yen and Sompo Japan Insurance gained 3.4 percent to 1,015 yen.
Oil held over $101 yen a barrel in Asian trade, with US crude at $101.16 at 0616 GMT. Nippon Oil Corp gained 2.5 percent to 748 yen and oil field developer Inpex Holdings rose 3.4 percent to 1.22 million yen. Trade was moderate on the Tokyo exchange's first section, with 2.1 billion shares changing hands, in line with last week's daily average. Advancing shares outpaced decliners by a ratio of more than five to one.