TOKYO: Japanese shares rose 1.67 percent by noon Thursday in a strong rebound after the leaders of Germany and France said they believed the future of embattled Greece lay within the eurozone.
The benchmark Nikkei 225 index at the Tokyo Stock Exchange rose 142.36 points to 8,660.93, after closing at its lowest point in more than 29 months the previous day.
The Topix index of all first-section issues gained 9.89 points, or 1.33 percent, to 751.58.
Rising expectations of a Greek default or even an exit from the eurozone have continued to shake the markets.
But concerns over potential discord among eurozone leaders eased after German Chancellor Merkel and French President Sarkozy said they were convinced Greece would remain in the eurozone.
The backing from two of Europe's major economies came after a conference call with Greek Prime Minister George Papandreou and against the backdrop of mounting global pressure on the European Union to get its house in order.
Market players were more optimistic about the eurozone debt crisis following the conference call, Tatsunori Kawai, chief strategist at kabu.com Securities, told Dow Jones Newswires.
Relatively cheap Japanese stock valuations also made investors feel comfortable, providing support for the Nikkei index around 8,600, Kawai added.
The effect from the positive signals, however, may fade quickly, as dealers said there are still deep-rooted concerns over the Europe's peripheral countries.
Major exporters rebounded, with Fanuc up 1.95 percent at 10,930 yen and Kyocera gaining 2.11 percent to 6,750.
Sony was up 1.06 percent at 1,517.
Euro-linked shares were higher, with Tokyo Electron up 3.45 percent at 3,740.
Copyright AFP (Agence France-Presse), 2011
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