Japan's Nikkei average rose 1.1 per cent today, with shares of steel and metals companies rising in the wake of a jump in commodity prices, while banks climbed on continued optimism about the US financial sector.
A rate hike the previous day from Australia, the first G20 country to raise interest rates since the onset of the financial crisis, has underscored for many that the global economy is on the mend, spurring gains in energy and metal prices.
Big gainers also included electronics conglomerate Hitachi which soared on a two-notch rating upgrade.
Goldman Sachs upgraded this week the US large-cap bank sector, saying share prices for companies in the industry did not reflect their earnings power. The news has helped boost both U.S and Japanese financial shares.
The Nikkei rose 1.1 per cent to 9,799.60, pulling away from an 11-week intraday low of 9,628.67 hit the previous day.
Last week, the index shed 5.2 percent, its worst weekly loss in about three months.
The broader Topix added 1.6 percent to 885.69.
Trading volume and turnover on the Tokyo exchange's first section picked up. Some 2.3 billion shares changed hands, compared to the 20-day average of around 2 billion shares.
The yen stood at 88.52 yen to the dollar, edging back to an eight-month high of 88.23 yen hit on trading platform EBS last week.
Most gains in financials stocks were due to short-covering, market players said.
Japan's top bank, Mitsubishi UFJ Financial Group, jumped 5.1 per cent to 499 yen and Mizuho Financial Group added 1.6 per cent to 187 yen.
Chuo Mitsui Trust Holdings surged 8.3 per cent to 341 yen after Nomura Securities raised its rating on the stock and lifted the target price to 450 yen from 380 yen, saying the bank was less likely than rivals to seek new capital.
Metal stock Dowa Holdings jumped 6.6 per cent to 547 yen while steelmaker JFE Holdings rose 4 per cent to 3,020 yen.
Hitachi shot up 7 per cent to 292 yen after Mizuho Securities upgraded its rating to a "1" from a "3", saying the company was highly likely to achieve its earnings targets partly due to a strong performance for its hard disk drive business.
Murata Manufacturing, an electronic parts maker, advanced 3.2 per cent to 4,170 yen after its president said that orders in the quarter just ended were stronger than expected.
But Aeonlost 1.1 per cent to 821 yen after Japan's second-largest retailer posted a 40 per cent decline in its first-half operating profit, hit by weak consumer spending and after analysts complained about a lack of disclosure at its analysts' meeting.
Advancing stocks outnumbered declining ones by more than 3 to 1.
Reuters