The benchmark Nikkei 225 index was up 0.21 percent, or 42.19 points, at 20,605.35 in early trade, while the broader Topix index climbed 0.27 percent, or 4.07 points, to 1,498.40.

"Japanese shares will continue trying to recover as investors are welcoming continued rallies in the US and a halt to the yen's gain," Online Okasan Securities said in a note.

The Dow Jones Industrial Average jumped 1.0 percent Monday, joining a global rally amid talk of economic stimulus in Germany and China and expectation of further Federal Reserve interest rate cuts.

"US and European equities had a solid night boosted by confirmation the US commerce department will delay its ban on (Chinese telecoms giant) Huawei for another 90 days," said Rodrigo Catril, senior FX strategist at National Australia Bank.

"Equity markets were also boosted by further speculation that the German government is preparing to ease fiscal policy with the news also fuelling a rise in core global bond yields," added Catril.

Investors are closely watching US Federal Reserve Chairman Jerome Powell's speech when he opens the central bank's annual Jackson Hole symposium later this week.

The dollar fetched 106.60 yen in early Asian trade, against 106.66 yen in New York on Monday and 106.39 yen in Tokyo late Monday.

Toyota rose 0.42 percent to 6,902 yen in early trade with Honda up 0.28 percent at 2,479 yen. Panasonic gained 0.55 percent to 811.4 yen with Sony up 0.55 percent at 5,929 yen.