TOKYO: Japanese stocks ended higher for a second consecutive session on Tuesday, recovering from last week's sharp sell-off, as growing optimism around domestic and US corporate earnings boosted sentiment.

The Nikkei index closed up 0.97% at 28,362.17 points, with consumer goods, materials makers and real estate companies leading gains. The broader Topix rose 0.83% to 1,844.91.

Japanese stocks took their lead from an overnight jump in US tech shares ahead of earnings from Amazon.com and Alphabet Inc later in the day.

In addition, many Japanese companies are reporting earnings this week, and some investors are betting that a gradual recovery in the global economy will lift profits.

Worries about a short-squeeze triggered by US retail investors shook global markets last week, but volatility has abated this week.

Stocks also benefited from hopes for more US economic stimulus and a rising number of US coronavirus vaccinations.

"US markets are starting to settle down, so we can turn our attention back to earnings and fundamentals," said Takashi Nishizawa, head of research at Nomura Securities.

"The US economy is on a stable footing. There's optimism about earnings for the US tech sector and Japanese manufacturers."Leading gains on Topix, Central Japan Railway Co rose 3.31%, followed by Sony Corp gaining 3.05%.

The biggest decliners were Keyence Corp and Hoya Corp, falling 2.12% and 1.81%, respectively.

The Japanese government is expected to extend a state of emergency for Tokyo and surrounding cities later in the day to curb a spike in coronavirus infections, but investors shrugged this off as they focused on the earnings outlook.

There were 154 advancers on the Nikkei index, against 68 decliners.

The volume of shares traded on the Tokyo Stock Exchange's main board was 1.03 billion, compared with the last 30-day average of 1.16 billion.