TOKYO: Tokyo stocks added 0.99 percent Thursday as investors eye signs of progress in the United States on avoiding the fiscal cliff, while a weaker yen also provided support.
The benchmark Nikkei 225 index at the Tokyo Stock Exchange rose 92.53 points to 9,400.88, while the broader Topix index of all first-section shares added 1.04 percent, or 8.05 points, to 779.44.
Investors kept a close eye on progress in a Washington budgetary impasse which has seen a deeply divided US Congress negotiate over the package of automatic spending cuts and tax hikes known as the fiscal cliff, slated to come into effect on January 1 unless a new spending deal is reached.
The current package threatens to drag the US into recession, dealing a huge blow to the wobbly global economy.
However, investors have taken positive comments from US lawmakers as a sign a deal was in sight, dealers said.
"Expectations are growing that negotiations will move forward," Yoshihiro Okumura, general manager of research at Chibagin Asset Management, told Dow Jones Newswires.
Profit taking capped further gains in Tokyo, added Hiroichi Nishi, general manager of the equity division at SMBC Nikko Securities.
"The focus is now on whether the US 'fiscal cliff' can be transformed to 'a gentle slope'," he told Dow Jones Newswires.
Shares in Japanese exporters got a boost from a weakening yen, which has been weighed by comments from Japan's main opposition leader Shinzo Abe.
Abe, widely tipped to become the nation's next prime minister after December elections, has repeatedly vowed to pressure the Bank of Japan into more aggressive monetary easing to boost the world's third-largest economy.
In afternoon forex trade, the dollar gained on the Japanese unit at 82.09 yen, up from 82.03 yen in New York late Wednesday, while the euro fetched 106.24 yen, from 106.14 yen in US trade.
The euro bought $1.2941 from $1.2939.
In stock trading, Canon rose 1.13 percent to 2,849 yen, Toyota added 1.15 percent to 3,515 yen and conglomerate Mitsubishi ended up 1.55 percent at 1,566 yen.
Sharp gained 3.04 percent to 169 yen after a report that the struggling electronics giant was talking with US technology firms, including Dell and Intel, for a capital injection.
Sony ended flat at 803 yen after initially slipping on another report in the Nikkei business daily that the electronics giant was eyeing the sale of its battery business to shore up a troubled balance sheet.