The benchmark Nikkei index of the Tokyo Stock Exchange rose 38.64 points to 10,313.16 by the lunch break. The Topix index of all first section issues rose 0.24 percent, or 2.20 points, to 913.05.

Concerns over possible tightening measures by Beijing to dampen inflation saw some fund flows into Japanese shares, said dealers, but gains were limited by sluggishness on Chinese markets.

The state-run China Securities Journal said in a commentary Friday that the nation's first rate hike this year could be around the Lunar New Year holiday in early February.

The Nikkei got off to a solid start after the Dow Jones Industrial average finished the Friday session higher on positive earnings from General Electric.

Compared to levels on Friday, the euro traded higher against the yen in Tokyo Monday, giving support to exporter shares after steep falls late last week.

The single European currency fetched 112.47 yen compared to 112.43 in New York on Friday.

The higher euro and stable dollar versus the yen are helping Japanese companies exposed to the euro, Kenichi Hirano, operating officer at Tachibana Securities, told Dow Jones Newswires.

"Some funds are flowing into Japanese shares out of emerging markets on concerns over tightening measures," Hirano added.

Expectations linger that China will soon raise interest rates to help cool persistent inflation pressures.

However, "there is no need to rush buying shares since the Japanese earnings season is kicking off later this week," said Toshikazu Horiuchi, an equity strategist at Cosmo Securities.

Among euro-linked exporters, Nikon rose 1.52 percent to 1,864 yen, with Honda Motor up 3.20 percent at 3,380 yen.

Kirin Holdings rose 1.64 percent at 1,113 yen, following a Nikkei daily report that the Japanese beverage giant will form an alliance with leading Chinese brewer China Resources (Holdings) to expand in the growing Chinese market.