TOKYO: Tokyo stocks rose 1.77 percent on Monday morning following a report that the International Monetary Fund is working on a rescue plan for Italy to help tackle the European debt crisis.
The Nikkei 225 index at the Tokyo Stock Exchange gained 144.35 points at 8,304.36 by the lunch break.
The Topix index of all first-section issues gained 1.51 percent, or 10.64 points, at 717.24.
Italian newspaper La Stampa reported Sunday that the IMF could bail out Italy with up to 600 billion euros ($800 billion) as Prime Minister Mario Monti came under pressure to speed up austerity measures.
The Turin-based daily cited IMF sources as saying that the fund could offer Italy financial support to give the newly installed premier a window of 12 to 18 months to enact reforms in a bid to restore waning market confidence.
The report, coupled with record retail sales over the US Thanksgiving weekend, boosted Tokyo share prices, said Hideyuki Ishiguro, supervisor of investment strategy at Okasan Securities.
However, "given the European sovereign debt crisis has already spread to various nations, IMF measures for Italy may not be sufficient," Ishiguro warned Dow Jones Newswires.
The euro rose to $1.3309 and 103.30 yen in early Asian trade on Monday from $1.3240 and 102.90 yen in New York late Friday. The dollar edged down to 77.62 yen from 77.72 yen.
Major exporters rose. Factory automation systems maker Fanuc rose 2.71 percent to 12,120 yen and Kyocera was up 3.12 percent at 6,610 yen.
Embattled Olympus fell 8.67 percent to 1,011 yen in thin trading, the first loss in five sessions.
"The stock looked overheated, after having risen 17 percent above its 25-day moving average, prompting investors to lock in gains," said an official at a Japanese brokerage.
Olympus is still down about 60 percent from the level before the ouster last month of chief executive Michael Woodford, who alleged overpayments in a series of acquisition deals in recent years.
Olympus later admitted to hiding investment losses dating back to the 1990s.
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