Japan's Nikkei average climbed 2 percent on Monday for its highest close in nearly three weeks as Honda Motor Co and other exporters gained on a weaker yen and inflation worries took a breather on lower oil prices.
Relief that the corporate earnings season was nearly over also helped the market climb, although the slide in oil hit trading companies such as Mitsubishi Corp hard, causing them to drag on the Nikkei.
Hoya Corp surged after the high-tech glass maker posted a 24 percent increase in quarterly net profit and it forecast a rise in first-half earnings, helped by the sale of a stake in an LCD glass unit. "With most of the results now out in Japan and the United States, there's a temporary easing of worries about earnings, while lower oil is helping to relieve worry over inflation," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.
"But this is just temporary relief. Worries about financial institutions in the United States are likely to crop up again, and with hedge fund results coming out next month, investors will grow nervous once more." The dollar was strong against the yen, trading at around 110.05 and giving exporters a welcome boost.
A weaker yen helps Japanese firms by pushing profits higher when repatriated. While oil rose over a dollar above $116 a barrel on concern that fighting between Russia and Georgia could disrupt energy exports from the Caspian region, its $5 decline in the previous session was still giving the market a boost.
Potential pitfalls ahead include Japan's second quarter gross domestic product (GDP) data due out on Wednesday, though market players said that bad figures were already likely to be factored in. The benchmark Nikkei gained 262.50 points to 13,430.91, its highest close since July 24. The broader Topix gained 1.6 percent to 1,280.00.
Exporters powered up on the stronger dollar, with carmakers especially strong. Honda climbed 4.6 percent to 3,630 yen, becoming the biggest contributor to the Nikkei 225 by volume weight, while Toyota Motor Corp rose 4.1 percent to 5,030 yen, the most actively traded stock by turnover.
The Nikkei business daily reported on Monday that Toyota, the world's biggest carmaker, is set to raise prices of hybrid cars and commercial vehicles by 1-3 percent in Japan as costs for steel and other materials soar. Industrial robot maker Fanuc Ltd rose 3.2 percent to 9,120 yen and Canon Inc gained 3.7 percent to 5,300 yen.
Hoya Corp jumped 6.5 percent to 2,375 yen. Trading firms slumped to become some of the biggest drags on the Nikkei, with Mitsubishi Corp down 1.8 percent to 2,965 yen and Itochu Corp down 4.1 percent to 916 yen. Mitsui & Co slid 1.9 percent to 1,897 yen. Trade was light on the Tokyo exchange's first section, with 1.8 billion shares changing hands, compared with last week's daily average of 2.2 billion. Advancing stocks beat declining ones by a ratio of more than 2 to 1.