TOKYO: Tokyo's Nikkei index rebounded in early trade Monday as investors picked up bargains even as they continued to fret over inflation worries.
The benchmark Nikkei 225 index shed earlier losses to trade up 1.06 percent, or 297.60 points, to 28,346.54 yen. The broader Topix index rose 1.28 percent, or 25.04 points, to 1,986.89.
The dollar stood at 112.31 yen, firmer from 112.22 yen seen on Friday in New York.
The market came under pressure at the opening bell as short-term investors dumped futures, taking cues from the rise of US yields.
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"But after the selling subsided, players returned to spot trading" to pick up bargains, Okasan Online Securities said in a note.
Players have high hopes that new Prime Minister Fumio Kishida, who will appear in parliament Monday, will issue fresh stimulus as he prepares for a general election on October 31.
But lingering concerns about inflation, high oil prices, as well as tense and uncertain US-China relations, continue to fuel anxiety among investors, analysts said.
Weaker-than-expected US jobs data, released last week, drove down Wall Street stocks.
For the immediate future, players will focus on the US September consumer price data, as well as Japanese corporate earnings.
"Tokyo shares this week will likely be taking one step forward and one step back," Okasan Online added.
The global market breathed a sigh of relief after Washington politicians reached a temporary deal to avoid a US government default.
"But worries over the US debt ceiling problem are continuing," as the current deal will expire early December, and lawmakers will have to negotiate another deal, Rakuten Securities said in a note.
Among major Tokyo shares, Sony Group jumped 3.92 percent to 12,325 yen.
Mitsubishi UFJ Financial Group firmed 1.80 percent to 662.5 yen.
Toyota rose 2.34 percent to 1,968 yen.
Nippon Steel added 1.15 percent to 1,938 yen.
Chipmaker Murata Manufacturing emerged from negative territory and added 1.13 percent to 8,616 yen. Advantest, maker of microchip testing tools, also gave up earlier losses and was flat at 9,090 yen.
SoftBank Group added 1.90 percent to 6,234 yen.